PrintThe following lecture will take you through the history of the NYMEX, the type of trading that occurs ("pit" vs. electronic), the major players, the commodities traded, and futures contract specifications.
Key Learning Points for the Mini-Lecture: NYMEX Contracts
While watching the Mini-Lecture, keep in mind the following key points and questions:
- NYMEX contracts are legally binding obligations to buy or sell commodities.
- Contracts are standardized.
- Each commodity contract has volume, price, location and date.
- The NYMEX trades (5) energy commodities along with (2) precious metals.
- Trading occurs both in the “pits” of the Exchange, as well as electronically.
- Margin requirements discourage many from trading.
- The Exchange has a unique set of symbols to identify the commodity/month/year.
- All prices are quoted in US dollars and cents.
- Each commodity has a specific delivery point.
- West Texas Intermediate Crude (WTI) is the global standard traded on the NYMEX.
- Futures contracts provide “price discovery.”
- Market participants include “commercial” or those interested in the physical commodity, and “non-commercial,” or “speculators.”