Crude Oil vs. Bean Oil
The bean oil market is much cheaper to trade than the WTI (West Texas Intermediate) crude oil market. They are settling in the same direction over 90% of the time, so that you can speculate in bean oil as a proxy for oil with less risk and stress. For instance, the CBOT bean oil futures margin is about $2,300, while the NYMEX crude oil margin is over $12,000. Further, an at-the-money put option in bean oil with two months to expiration is about $1,800, but an oil put with a similar expiration date is almost $9,000. Obviously, the risk-reward dynamic comes into play here. If you take on more risk, your timing is accurate, and you get the direction right, you stand to make more trading crude oil than you would trading bean oil. But the risk of financial loss and sleepless nights is also far less for bean oil traders. Don't have access to bean oil futures and options at your current brokerage? Check us out at DeCarley Trading! #oil #beanoil #ags #futures #options #iranwar #crudeoil