Commodity Futures Pricing Calculator
Calculate futures contract values, margin requirements, and profit/loss for commodity trading. Essential for managing risk and understanding futures pricing.
Profit/Loss Analysis
Margin Requirements
Contract Information
Contract Size: 0
Leverage: 1:1
Tick Size: 0.01
Note: Futures trading involves high risk
Understanding Commodity Futures
Commodity futures are standardized contracts to buy or sell a specific commodity at a predetermined price on a future date. They provide leverage and hedging opportunities but carry significant risk.
How Futures Contracts Work
- Standardized Contracts: Fixed quantity, quality, and delivery date
- Leverage: Control large positions with small margin deposits
- Hedging: Protect against price fluctuations
- Speculation: Profit from price movements
- Settlement: Cash settlement or physical delivery
Major Commodity Futures
| Commodity | Symbol | Contract Size | Exchange |
|---|---|---|---|
| Gold | GC | 100 troy ounces | COMEX |
| Silver | SI | 5,000 troy ounces | COMEX |
| Crude Oil | CL | 1,000 barrels | NYMEX |
| Corn | C | 5,000 bushels | CBOT |
| Coffee | KC | 37,500 pounds | ICE |
Margin Requirements
Futures trading requires posting margin as collateral. Initial margin is required to open a position, while maintenance margin must be maintained.
- Initial Margin: Deposit required to open position
- Maintenance Margin: Minimum balance to keep position open
- Margin Call: When equity falls below maintenance margin
- Leverage: Allows control of large positions with small capital
- Variation Margin: Daily settlement of gains/losses
Futures Pricing Factors
- Spot Price: Current market price of the commodity
- Cost of Carry: Storage, insurance, and financing costs
- Time Value: Time remaining until expiration
- Risk Premium: Compensation for bearing risk
- Market Sentiment: Bullish or bearish expectations
Long vs. Short Positions
Long Position
- • Buy contract expecting price increase
- • Profit when price rises
- • Loss when price falls
- • Unlimited profit potential
- • Limited risk (margin amount)
Short Position
- • Sell contract expecting price decrease
- • Profit when price falls
- • Loss when price rises
- • Limited profit potential
- • Unlimited risk potential
Risk Management
- Position Sizing: Risk only small percentage of capital
- Stop Loss Orders: Automatically close losing positions
- Diversification: Spread risk across different commodities
- Time Management: Don't hold positions longer than planned
- Market Hours: Be aware of trading hours and liquidity
Futures vs. Spot Trading
| Aspect | Futures | Spot |
|---|---|---|
| Leverage | High (10-20x) | Low (1-2x) |
| Capital Required | Low (margin) | High (full amount) |
| Settlement | Daily variation | Immediate |
| Delivery | Future date | Immediate |
Commodity Market Hours
- CME Group: Sunday 6:00 PM - Friday 5:00 PM ET
- ICE Futures: Sunday 7:00 PM - Friday 5:30 PM ET
- Electronic Trading: 24/5 for many contracts
- Globex: Electronic trading platform
- Liquidity: Highest during business hours
Tax Considerations
- 60/40 Rule: 60% long-term, 40% short-term capital gains
- Section 1256: Special tax treatment for regulated futures
- Mark-to-Market: Taxed on unrealized gains annually
- Business Expenses: Trading expenses may be deductible
- Professional Advice: Consult tax professional
Important: Futures trading involves substantial risk of loss and is not suitable for all investors. The leverage in futures can work against you as well as for you. Only trade with money you can afford to lose. Always use proper risk management and consider consulting a financial advisor.