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Summary
Crude Oil Bungees (limited risk futures) are cash-settled contracts with a variable payout that allow traders to take a position on the expected direction of Crude Oil Futures contracts. Bungees enable traders to speculate on where the price of Crude Oil Futures will be on the designated expiration date, while limiting their risk exposure to extreme volatile price changes.
Contract Specifications
Contract Type
Bungee (limited risk future) - A cash-settled contract with a variable payout structure and maximum contract value ranging from $100 to $500.
Underlying
The underlying is the price per barrel of Crude Oil (in U.S. dollars) obtained from the WTI Light, Sweet, Crude Oil Futures contracts traded on the New York Mercantile Exchange. (NYMEX®1).
Contract Value
$500; The maximum contract payout value.
Tick Value
$1; The dollar value payout per tick movement in the underlying market.
Tick Size
$0.01; The incremental price movement in the underlying that corresponds to the specified tick value.
Minimum Price Increment
$0.01; All prices must be entered in increments equivalent to the contract's tick size of $0.01, starting from the specified floor (lower level) to the specified cap (upper level).
Bungee Range
$5.00; The values between which payout for the Bungee contract is determined, defined by a floor and a cap.
Trading Hours
Regular session trading hours are 8:00am to 5:00pm ET, Monday through Thursday and 8:00am to 4:00pm ET on Friday. On the contract's specified last trading day, Crude Oil bungee contracts close at 2:30pm ET. For additional information, please refer to the Trading Hours Table.
Trading Months
The futures contract months that will be used for the underlying will be taken from all twelve NYMEX Crude Oil Futures Contract delivery months (CFC Delivery Month): January, February, March, April, May, June, July, August, September, October, November, or December. Please refer to the Settlement Source Table for a schedule of the dates associated with the specific CFC Delivery Months that will be used as the underlying.
Last Trading Day
Trading in the contract will stop as of the date listed in the contract's name and in the "At a Glance" table (right).
Expiration Date
The date on which the expiration value for the contract is calculated or released. For Crude Oil bungee contracts, the expiration date is usually the same day as the last trading day, which is listed in the "At a Glance" table (right).
Settlement Date and Time
The date on which the final settlement value is determined and cash payouts are made to the appropriate member accounts. Contracts are settled on the specified settlement date, which is listed in the "At a Glance" table (right). Settlement generally occurs within an hour of a contract's closing time (the closing time is displayed in the name of the contract). For Crude Oil bungee contracts, the settlement date is usually the same as the expiration date.
Expiration Value
The expiration value of Crude Oil is calculated by HedgeStreet by using a proprietary algorithm that takes a sampling of data points obtained from the relevant Crude Oil futures contract currently trading on the NYMEX. HedgeStreet calculates the expiration value by taking the last 25 trade prices in the designated NYMEX Crude Oil futures contract just prior to the close of trading in the designated HedgeStreet bungee contract and removes the highest 5 and the lowest 5 trade prices, using the remaining 15 NYMEX Crude Oil futures trade prices to calculate the expiration value. The calculation used is a simple average of all 15 Crude Oil futures contract trade prices.
Settlement Value
The settlement value, a cash payout, ranges from $0 to $500, depending on the final expiration value of Crude Oil relative to the Bungee's range.
Speculative Position Limits
The aggregate position limit is 50,000 contracts.
Underlying Data Feed
Crude Oil underlying price quotes are displayed by Barchart with a 30 minute delay in the Trader Center.
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Example
2:30PM Jun Crude Oil $40.00 to $45.00 (W) Bungee (08 May 09)
This Bungee contract allows traders to take a position on movements in the Crude Oil price within the range of $40.00 to $45.00, as calculated by HedgeStreet (based on the NYMEX June 2009 Crude Oil Futures contract) on May 8, 2009.
Bungee Name Format
[LTD CLOSE TIME][UNDERLYING FUTURES][ASSET][RANGE][DURATION][LAST TRADING DAY]
LTD Close Time
"2:30PM" - The time on the last trading date that the contract will stop trading.
Underlying Futures
"Jun" - The Crude Oil futures contract month on which the contract is based, where the year is the nearest delivery year available for the futures month listed. In this case, the underlying futures contract month would be June 2009.
Asset
"Crude Oil" - The underlying for the bungee contract.
Range
"$40.00 to $45.00" - specifies the values between which payout is determined. The floor (lower level) is $40.00, and the cap (upper level) is $45.00. Traders receive $1 per $0.01 movement in the underlying Crude Oil price within this range.
Duration
"(W)" - Weekly duration.
Last Trading Day
"(08 May 09)" - The date the contract will stop trading.
Positions
Buy if you think the price of Crude Oil will increase as of May 8, 2009.
Sell if you think the price of Crude Oil will decrease as of May 8, 2009.
Settlement
Final payout is based on the expiration value of Crude Oil futures, relative to the Bungee's range. For buyers, the final payout is as follows:
| Condition |
Payout |
| Expiration value of Crude is < = floor |
$0 |
| Expiration value of Crude is > = cap |
$500 |
| Expiration value of Crude is between floor and cap |
$1 per $0.01 tick above the floor |
For sellers, the final payout is as follows:
| Condition |
Payout |
| Expiration value of Crude is < = floor |
$500 |
| Expiration value of Crude is > = cap |
$0 |
| Expiration value of Crude is between floor and cap |
$1 per $0.01 tick below the cap |
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