Politics for Pros- moderated Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Politics for Pros- moderated

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: skinowski who wrote (256118)	6/29/2008 8:30:21 PM
From: rich evans	Read Replies (1) of 793868

In my opinion you are only 1/2 right in your analyse. The futures contract would be a bet on the price of oil in the future as you state and their must be two sides of the bet and a zero sum outcome. But the price of the contract would depend on the price the willing sellers and willing buyers would agree on like the points on a football game. So the sellers of the contract may require quite a high price before agreeing thus the price of oil goes up. And the present spot cash price after the notice date would be the price for cash delivery. So if the seller of the futures contract wanted not to be at risk for the future delivery of oil at his agreed price, he could if oil was cheaper at the spot cash price buy the oil, store the oil for a fee, pay interest on money spent, and pay insurance. Hopefully these costs plus the spot present oil price he paid would be less then the future price someone agreed to pay him. So speculators could change the price of futures contracts if they cause demand for the price to be adjusted upwards to find a willing seller. Rich

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next