Crack Spread Handbook
Mon Jul 25 20:25:00 CDT 2011 CT
Related Keywords: Energy, Product Information

Name

Trading the Price Spread Between Crude Oil and Products Derived from It

Oil refinery profits are tied directly to the spread, or difference, between the price of crude oil and the prices of products that result from refining crude oil: gasoline, diesel fuel, jet fuel and heating oil.

The Crack Spread Handbook provides a thorough explanation of the different ways that the crack spread can be traded, for hedging or profit. Contents include:

  • The Two Basic Types of Crack Spreads
  • Trading Options on Crack Spreads
  • Factors Affecting Crack Spread Value
  • Issues to Consider When Implementing Trades
  • Crack Spread Trading Examples
    • Fixing Refiner Margins Through a Simple 1:1 Crack Spread
    • Refiner with a Diversified Slate Hedging with the 3:2:1 Crack Spread
    • Purchasing a Crack Spread (or Refiner's Reverse Crack Spread)
    • Replicating a Refiner's 3:2:1 Crack Spread with Crack Spread Options
    • Setting a Floor with Crack Spread Options

 
 
 
 
Calgary Houston Chicago New York Washington São Paulo Belfast London Singapore Hong Kong Seoul Tokyo
  • © 2013 CME Group Inc. All rights reserved.
  • CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of five Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX, COMEX and KCBT.