Trading Copper Futures – Overview & Trading Strategies
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Copper Futures are standardized contracts in which two parties agree to buy or sell copper at a future date for the current price. A person going long on the contract agrees to purchase a certain quantity of copper at a predefined date and price. The person going short has an obligation to deliver and sell it at the specified price on the contractual date.
Let’s take an example of how copper futures work. Suppose two people agree to trade on a contract with 25 tonnes on the LME and the price per tonne being $9172.50. If the contract’s maturity date is 3 months, then the buyer must pay approximately 25 times $9172.5, meaning a total of $229,312.50 to deliver 25 tonnes of copper after 3 months. In most cases, the contract buyer rarely goes for the delivery options. Usually, they settle the trade with an offsetting position, or a cash-based settlement occurs.
Likewise, a person entering a short futures position must deliver the metal’s equivalent quantity at the specified time. Suppose, in the above case, a trader goes short on the futures contract. He takes on the obligation to deliver 25 tonnes of copper in 3 months and receive $229,312.5k.
0:00 Music Intro
0:10 Intro
1:14 Disclaimer
1:17 What are copper futures?
3:12 Contract specifications
4:31 Reasons people choose copper futures
6:09 Who trades it
7:42 Where to find it
10:13 The price movers
11:30 Final thoughts
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