Go Long

Crude Oil - 2010

In this hypothetical example and with hypothetical prices for the year 2010, you have bought a futures contract for crude oil for $25 a barrel and you have instructed your broker to sell your futures contract if prices either decline to $20 for a loss or rise to $30 for a profit, whichever happens first. If the market rises to $30 a barrel before it drops to $20 you will make $5 a barrel profit. You bought your hypothetical contract at $25 a barrel and you sold your hypothetical contract at $30 a barrel for a profit of $5 a barrel. How much money you make in total will depend on the size of the contract you are trading. If the contract size is 1000 barrels, you will make $5,000. If the contract size is 100 barrels, you will make $500. This does not take into consideration any commission you will have to pay for the transaction. In the futures markets, contract sizes for wheat, corn, gold, cattle, stock indices, currencies, and all other future contracts are set and established by the exchanges where they are traded and any futures broker will be able to give you the current contract sizes for any futures or options contract that you might interested in.