I am trying to figure out how much money is actually being transacted on a daily basis in the futures markets…crude oil in particular. CME group says they do approximately 900,000 daily contracts…but how much money does this translate into?
And the follow-up or additional question I am trying to figure out is how much money is needed to influence a market like crude oil and the buy/sell patterns and prices. Is 10,000 contracts the number or what?
I would really appreciate some insight into this as I can’t seem to find a good answer anywhere.
Multiply volume times price and you’ll get a notional dollar amount. In reality, though, no money is actually transacted. Futures contracts are agreement for future delivery (or cash settlement in some cases). That means aside from posting margin on the position there isn’t an exchange of goods when a trade is done. That all happens later based on the number of open contracts still outstanding at delivery time. Of course, marking-to-market means gains and losses move around, but that nets out to zero.
What it takes to move prices depends on the liquidity of the contract you’re trading at that time.