For those not in the know, investing in crude oil futures might sound complicated and risky. In many ways, it can be but with a little patience and persistence, you can actually make money on investing in crude oil futures and options.
Definition
To start investing, you must understand that an oil futures option is only the right, never the obligation, to call (buy) or put (sell) a thousand barrels of crude oil at the strike price within the expiration date. You will pay a premium to be entitled to this right. Think of investing in oil futures as akin to trading in the stock markets only that the things being traded are crude oil and its distillates. Take note, too, that crude oil options are traded in barrels while heating oil futures and unleaded gas futures are traded in gallons.
Definition
To start investing, you must understand that an oil futures option is only the right, never the obligation, to call (buy) or put (sell) a thousand barrels of crude oil at the strike price within the expiration date. You will pay a premium to be entitled to this right. Think of investing in oil futures as akin to trading in the stock markets only that the things being traded are crude oil and its distillates. Take note, too, that crude oil options are traded in barrels while heating oil futures and unleaded gas futures are traded in gallons.