Our oil CFDs are continuous pricing, i.e. non-expiring products that aim to deliver a fair value estimation of the spot oil price, based on a weighted average (according to time of expiry) of the front month and back month futures contracts.
Calculation
(price of contract 'a' X days remaining in the contract) + (price of contract 'b' X days remaining in the contract) / total days.
Liquidity providers also consider variables like liquidity and volatility of underlying markets and adjust prices accordingly.
(price of contract 'a' X days remaining in the contract) + (price of contract 'b' X days remaining in the contract) / total days.
Liquidity providers also consider variables like liquidity and volatility of underlying markets and adjust prices accordingly.
Benefits of pricing
- No need to roll futures contracts. The liquidity provider gradually transitions open positions to the next available contract as the front month approaches expiry.
- No price spikes that require adjustments due to front month contract expiry.
- Exposure to the underlying spot price movements of oil indices.
