-
BINARIUM
Best Binary Broker 2020!
Perfect for Beginners!
Free Trading Education! Free Demo Acc!
Get Your Sign-up Bonus Now: -
Heating Oil Futures Trading Basics
Heating Oil futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of heating oil (eg. 42000 gallons) at a predetermined price on a future delivery date.
Heating Oil Futures Exchanges
You can trade Heating Oil futures at New York Mercantile Exchange (NYMEX).
NYMEX Heating Oil futures prices are quoted in dollars and cents per gallon and are traded in lot sizes of 42000 gallons (1000 barrels).
Exchange & Product Name | Symbol | Contract Size | Initial Margin |
NYMEX Heating Oil Futures (Price Quotes) |
HO | 42000 gallons (Full Contract Spec) |
USD 10,125 (approx. 16%) (Latest Margin Info) |
Heating Oil Futures Trading Basics
Consumers and producers of heating oil can manage heating oil price risk by purchasing and selling heating oil futures. Heating Oil producers can employ a short hedge to lock in a selling price for the heating oil they produce while businesses that require heating oil can utilize a long hedge to secure a purchase price for the commodity they need.
Heating Oil futures are also traded by speculators who assume the price risk that hedgers try to avoid in return for a chance to profit from favorable heating oil price movement. Speculators buy heating oil futures when they believe that heating oil prices will go up. Conversely, they will sell heating oil futures when they think that heating oil prices will fall.
Learn More About Heating Oil Futures & Options Trading
You May Also Like
Continue Reading.
Buying Straddles into Earnings
Buying straddles is a great way to play earnings. Many a times, stock price gap up or down following the quarterly earnings report but often, the direction of the movement can be unpredictable. For instance, a sell off can occur even though the earnings report is good if investors had expected great results. [Read on. ]
Writing Puts to Purchase Stocks
If you are very bullish on a particular stock for the long term and is looking to purchase the stock but feels that it is slightly overvalued at the moment, then you may want to consider writing put options on the stock as a means to acquire it at a discount. [Read on. ]
What are Binary Options and How to Trade Them?
Also known as digital options, binary options belong to a special class of exotic options in which the option trader speculate purely on the direction of the underlying within a relatively short period of time. [Read on. ]
Investing in Growth Stocks using LEAPS® options
If you are investing the Peter Lynch style, trying to predict the next multi-bagger, then you would want to find out more about LEAPS® and why I consider them to be a great option for investing in the next Microsoft®. [Read on. ]
Effect of Dividends on Option Pricing
Cash dividends issued by stocks have big impact on their option prices. This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date. [Read on. ]
Bull Call Spread: An Alternative to the Covered Call
As an alternative to writing covered calls, one can enter a bull call spread for a similar profit potential but with significantly less capital requirement. In place of holding the underlying stock in the covered call strategy, the alternative. [Read on. ]
Dividend Capture using Covered Calls
Some stocks pay generous dividends every quarter. You qualify for the dividend if you are holding on the shares before the ex-dividend date. [Read on. ]
-
BINARIUM
Best Binary Broker 2020!
Perfect for Beginners!
Free Trading Education! Free Demo Acc!
Get Your Sign-up Bonus Now: -
Leverage using Calls, Not Margin Calls
To achieve higher returns in the stock market, besides doing more homework on the companies you wish to buy, it is often necessary to take on higher risk. A most common way to do that is to buy stocks on margin. [Read on. ]
Day Trading using Options
Day trading options can be a successful, profitable strategy but there are a couple of things you need to know before you use start using options for day trading. [Read on. ]
What is the Put Call Ratio and How to Use It
Learn about the put call ratio, the way it is derived and how it can be used as a contrarian indicator. [Read on. ]
Understanding Put-Call Parity
Put-call parity is an important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in 1969. It states that the premium of a call option implies a certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa. [Read on. ]
Understanding the Greeks
In options trading, you may notice the use of certain greek alphabets like delta or gamma when describing risks associated with various positions. They are known as “the greeks”. [Read on. ]
Valuing Common Stock using Discounted Cash Flow Analysis
Since the value of stock options depends on the price of the underlying stock, it is useful to calculate the fair value of the stock by using a technique known as discounted cash flow. [Read on. ]
Heating oil futures
About NYMEX heating oil futures
Heating oil, also known as No. 2 fuel oil, accounts for about 25% of the yield of a barrel of crude, the second largest “cut” after gasoline. The heating oil futures contract at the New York Mercantile Exchange trades in units of 42,000 gallons (1,000 barrels) and is based on delivery in New York harbor, the principal cash market trading center.
In addition to heating oil futures, NYMEX also lists futures on crude oil, natural gas, and unleaded gasoline. All of these products are available to trade through Schwab Futures.
NYMEX heating oil futures specifications
Heating oil futures, New York Mercantile Exchange, symbol HO. Minimum Tick Size 0.0001 cent per gallon, worth $4.20 per contract.
Electronic trading is conducted from 6:00 p.m. U.S. ET until 5:00 p.m. U.S. ET via the CME Globex® trading platform, Sunday through Friday.
Primary heating oil futures contracts trade every calendar month, from January through December.
Important disclosures
Securities and other non-futures related brokerage products are offered by Charles Schwab & Co., Inc. (Member SIPC) (“Schwab”). Trading in futures and futures options is offered by Charles Schwab Futures. Deposit and lending products and services are offered by Charles Schwab Bank, Member FDIC and an Equal Housing Lender (“Schwab Bank”).
Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the options disclosure document titled Characteristics and Risks of Standardized Options.
Futures trading carries a high level of risk and is not suitable for all investors. Certain requirements must be met to trade futures. Please read the Risk Disclosure Statement for Futures and Options on our website, prior to applying for an account.
Bank sweep accounts are generally held at Charles Schwab Bank. Funds deposited at Schwab Bank are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 when aggregated with all other deposits held by you in the same capacity at Schwab Bank. Funds on deposit at Schwab Bank are not deposits or obligations of Charles Schwab & Co., Inc. and may not be covered by the Securities Investor Protection Corporation (SIPC). NOTE: Funds deposited at an FDIC insured institution are insured, in aggregate, up to $250,000 per depositor, per insured institution based upon account type by the Federal Deposit Insurance Corporation (FDIC).
The Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (Member SIPC), offers investment services and products, including Schwab brokerage accounts. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides deposit and lending services and products. Access to Electronic Services may be limited or unavailable during periods of peak demand, market volatility, systems upgrade, maintenance, or for other reasons.
This site is designed for U.S. residents. Non-U.S. residents are subject to country-specific restrictions. Learn more about our services for non-U.S. residents.
© 2020 Charles Schwab & Co., Inc. All rights reserved. Member SIPC . Unauthorized access is prohibited. Usage will be monitored.
Heating Oil Options Explained
Heating Oil options are option contracts in which the underlying asset is a heating oil futures contract.
The holder of a heating oil option possesses the right (but not the obligation) to assume a long position (in the case of a call option) or a short position (in the case of a put option) in the underlying heating oil futures at the strike price.
This right will cease to exist when the option expire after market close on expiration date.
Heating Oil Option Exchanges
Heating Oil option contracts are available for trading at New York Mercantile Exchange (NYMEX).
NYMEX Heating Oil option prices are quoted in dollars and cents per gallon and their underlying futures are traded in lots of 42000 gallons (1000 barrels) of heating oil.
Exchange & Product Name | Underlying Contract Size | Exercise Style | Option Price Quotes |
NYMEX Heating Oil Options | 42000 gal (Full Contract Specs) |
American | Calls | Puts |
Call and Put Options
Options are divided into two classes – calls and puts. Heating Oil call options are purchased by traders who are bullish about heating oil prices. Traders who believe that heating oil prices will fall can buy heating oil put options instead.
Buying calls or puts is not the only way to trade options. Option selling is a popular strategy used by many professional option traders. More complex option trading strategies, also known as spreads, can also be constructed by simultaneously buying and selling options.
Heating Oil Options vs. Heating Oil Futures
Additional Leverage
Limit Potential Losses
As heating oil options only grant the right but not the obligation to assume the underlying heating oil futures position, potential losses are limited to only the premium paid to purchase the option.
Flexibility
Using options alone, or in combination with futures, a wide range of strategies can be implemented to cater to specific risk profile, investment time horizon, cost consideration and outlook on underlying volatility.
Time Decay
Options have a limited lifespan and are subjected to the effects of time decay. The value of a heating oil option, specifically the time value, gets eroded away as time passes. However, since trading is a zero sum game, time decay can be turned into an ally if one choose to be a seller of options instead of buying them.
Learn More About Heating Oil Futures & Options Trading
You May Also Like
Continue Reading.
Buying Straddles into Earnings
Buying straddles is a great way to play earnings. Many a times, stock price gap up or down following the quarterly earnings report but often, the direction of the movement can be unpredictable. For instance, a sell off can occur even though the earnings report is good if investors had expected great results. [Read on. ]
Writing Puts to Purchase Stocks
If you are very bullish on a particular stock for the long term and is looking to purchase the stock but feels that it is slightly overvalued at the moment, then you may want to consider writing put options on the stock as a means to acquire it at a discount. [Read on. ]
What are Binary Options and How to Trade Them?
Also known as digital options, binary options belong to a special class of exotic options in which the option trader speculate purely on the direction of the underlying within a relatively short period of time. [Read on. ]
Investing in Growth Stocks using LEAPS® options
If you are investing the Peter Lynch style, trying to predict the next multi-bagger, then you would want to find out more about LEAPS® and why I consider them to be a great option for investing in the next Microsoft®. [Read on. ]
Effect of Dividends on Option Pricing
Cash dividends issued by stocks have big impact on their option prices. This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date. [Read on. ]
Bull Call Spread: An Alternative to the Covered Call
As an alternative to writing covered calls, one can enter a bull call spread for a similar profit potential but with significantly less capital requirement. In place of holding the underlying stock in the covered call strategy, the alternative. [Read on. ]
Dividend Capture using Covered Calls
Some stocks pay generous dividends every quarter. You qualify for the dividend if you are holding on the shares before the ex-dividend date. [Read on. ]
Leverage using Calls, Not Margin Calls
To achieve higher returns in the stock market, besides doing more homework on the companies you wish to buy, it is often necessary to take on higher risk. A most common way to do that is to buy stocks on margin. [Read on. ]
Day Trading using Options
Day trading options can be a successful, profitable strategy but there are a couple of things you need to know before you use start using options for day trading. [Read on. ]
What is the Put Call Ratio and How to Use It
Learn about the put call ratio, the way it is derived and how it can be used as a contrarian indicator. [Read on. ]
Understanding Put-Call Parity
Put-call parity is an important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in 1969. It states that the premium of a call option implies a certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa. [Read on. ]
Understanding the Greeks
In options trading, you may notice the use of certain greek alphabets like delta or gamma when describing risks associated with various positions. They are known as “the greeks”. [Read on. ]
Valuing Common Stock using Discounted Cash Flow Analysis
Since the value of stock options depends on the price of the underlying stock, it is useful to calculate the fair value of the stock by using a technique known as discounted cash flow. [Read on. ]
-
BINARIUM
Best Binary Broker 2020!
Perfect for Beginners!
Free Trading Education! Free Demo Acc!
Get Your Sign-up Bonus Now: -