06-arbitrage-guide.docx - Arbitrage Guide Among the various...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Arbitrage Guide Among the various commodities traded in financial derivative markets across the world, the WTI crude oil serves as one of the most popular underlying commodity being traded in exchange markets such as the New York Mercantile Exchange (NYMEX). WTI crude oil is one of the most popular crude oil grading used as a benchmark for oil pricing in North America. Arbitrage trading in WTI crude oil has recently gained momentum. It involves simultaneous selling and buying of currencies, financial securities or commodities (such as oil) across different markets or in the form of derivatives for taking advantage of the different pricing levels or spreads created for the same financial asset. For example, trading in WTI crude oil over the NYMEX market involves multiple costs of extraction due to onshore or offshore drilling and price differentials that provide huge arbitrage possibilities in trading. Various positions like net short or net long in oil commodity trading can be offset with futures contract for taking advantage of oil prices’ volatility or for hedging purposes.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern