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Copper Futures Price

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Copper Futures Price

The copper futures price is different than the copper price in the cash (physical) market. Generally, the price of a commodity for future delivery is higher than the cash price due to carrying costs (insurance, interest, and warehousing fees). This is called contango. The opposite of contango is backwardation. Backwardation is when the price of a commodity for future delivery is lower than the cash price Backwardation is normal in a “seller’s market.”

When you trade copper futures, your futures price depends on where you get into the market. After you post your initial margin, your profit or loss depends on where you enter and exit the market (minus transaction costs).

For example:

The contract size for copper is 25,000 lbs. So each $.01 move equals $250. As the market moves your account value adjusts. If your account value drops below the maintenance margin a margin call is due. A margin call can be met by offsetting positions or adding money to your account.

Copper commodity futures contract trading can be both highly profitable and extremely risky because of leverage. Leverage is the ability to control a large quantity of a commodity for a very modest investment. That investment is called margin. Be certain you understand the risk of trading futures on margin before you consider opening a copper trading account.

Trading futures is like driving a car without insurance. You save the insurance premium, but if you crash you will wish that you were insured. If you have very deep pockets or deal with the physical copper product then futures may be for you. If you are a speculator with a limited amount of risk capital then copper options are a better way for you to invest in the copper market.

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Copper Futures

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Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicition. This material is not a research report preparfed by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.

 
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