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( Micro ) contract for Crude Oil ??


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( Micro ) contract for Crude Oil ??

  #1 (permalink)
vpd1952
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with the recent micros that the CME introduced for the Indexes ( ES,YM,NQ and TF )
as well as there being the micro Gold ( MGC ) contract - hopefully one for Crude Oil is just around the corner?

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  #2 (permalink)
 tr8er 
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it's not a micro, but the QM is half the price of the CL

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  #3 (permalink)
vpd1952
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tr8er,
I was wondering if a Micro might be in the works, due to the volatility in Crude
and given that there are now Micro contracts for the Indexes

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 matthew28 
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vpd1952 View Post
I was wondering if a Micro might be in the works, due to the volatility in Crude
and given that there are now Micro contracts for the Indexes

Personally I doubt it. There is a standard contract and a mini. In my opinion if they created a micro that would just split traded volume further as small traders would then have a choice of mini or micro and one product would lose out and have poor volume in comparison. In a choice of three there will always be one product that is overlooked compared to the other two.
The CME would most likely be creating a new micro product that wouldn't be particularly popular, or it could in theory become more popular than the mini (unlikely as the volume will obviously be much lower when it begins and the micro product commissions and exchange fees are always higher compared to their larger counterparts), and damage their own already existing mini product.

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 SMCJB 
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I believe the idea of Micro Crude (and even a Micro NatGas??) contract is quiet popular especially after the success of MES MNQ. I believe @FuturesTrader71 was quiet involved in working with CME on getting MES going, maybe he knows something?

Regarding having both Mini & Micro.... Most if not all Micro contracts have an eMini and a Full size contract...
  1. S&P 500 has three contracts (SP ~$250, ES ~$50 and MES ~$5) although the full-size barely trades, the real contract is the ES.
  2. Gold has three contracts (GC ~100oz, QO ~50oz, and MGC ~10oz) although Gold eMini (QO) volumes have dropped to virtually nothing (<1000 contracts vs Micro 70,000 yesterday)
  3. Silver has three contracts (SI ~5000oz, QI ~2500oz, and SIL ~1000oz) although Silver eMini (QI) volumes have dropped to virtually nothing (~150 contracts vs Micro 12,000 yesterday)
  4. Currencies (eg USD:EUR have three contracts. (eg 6E ~€125,000, E7 ~€62,500, M6E ~€12,500). Volumes yesterday were 6000 vs 23000, so from a notional size, very similar.

With the metals it makes you wonder why they don't delist the eMini's and move everything to the Micro's. Well one issue is...

Regarding deliverability...
  • Indexs - SP/ES/MES all financially settled
  • Metals - Full Size & Micro (eg GC+MGC, SI+SIL) physically delivered, eMini Financially settled (QO, QI)
  • Currencies - All physically delivered (eg 6E, E7, M6E)

It should be noted that the physically delivered micros are all fungible. Meaning if you are long 1 GC and short 10 MGC you can instruct your broker/the clearing house to offset those positions, leaving you with no position, even though both contracts are physically deliverable. I have done this personally with GC, SI, 6A, 6B, 6C, 6E & 6J.

Which brings us back around to CL, QM and a micro crude....
CL is a 1000bbl physically delivered contract
QM is a 500bbl penultimate financially settled contract
so I would assume a crude micro would be 100bbl but would it be physically delivered and fungible with CL?

For what its worth
NG is a 10,000 MMBtu physically delivered contract
QG is a 2,500 MMBtu penultimate financially settled contract
QG is the odd one out in the eMini's being 25% of the size, so there already is a lot more granularity in that there is in crude. This is probably because the standard ICE contract is 2500 MMBtu and the industry standard for physical is 2500 MMBtu/day as opposed to 10000 MMBtu/month

Looking at contract size...

SP to ES 1:5, SP to MES 1:50 with ES to MES 1:10
GC to QO 1:2, GC to MGC 1:10
SI to QI 1:2, SI to SIL 1:10
6E to E7 1:2, 6E to M6E 1:10
CL to QM 1:2
NG to QG 1:4

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  #6 (permalink)
vpd1952
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matthew28 ,
Thank you for your reply and insight

I never thought of looking at it, in the way that you mentioned - makes sense though
The more variations of a particular Markets, the odds that one will always lag the other one in Volume and O.I.

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  #7 (permalink)
vpd1952
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SMCJB ,
Thank you so much for explaining and breaking down / comparing the various Markets and the contracts within each one to one another

I have started tracking the mini Crude and mini Natural gas contracts ( via CME website and the day to day Globex Volume ) compared to their Larger size contracts

Hopefully with all of the volatility and Maintenance Margins being what they currently are, a Micro CL and NG contract might be on the near horizon

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  #8 (permalink)
 steve2222 
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There is a lot of discussion by FuturesTrader71 and others (incl moi) about a micro CL contract in these two threads:




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  #9 (permalink)
vpd1952
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steve2222 ,
Thanks so much for posting this

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  #10 (permalink)
skraadiing
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I think microCL could be interesting but what do you think about microDax?

Do you think a micro dax would be interesting?

Roberto

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Last Updated on January 4, 2021


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