Crack Spread Handbook

  • 14 Aug 2013
  • By CME Group
  • Topics: Energy

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

Read the Handbook

Futures & Options Trading

As the world's leading and most diverse derivatives marketplace, CME Group is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through the CME Globex electronic trading platform and trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort.

Idea Exchange

Idea Exchange is your direct link to the product managers, marketers, and the development teams who create cmegroup.com and will allow you to review functionality, participate in focus and provide feedback on upcoming Web initiatives

Idea Exchange - Join Our User Focus Program

Contact Us

CME Group/Chicago HQ:
Local: +1 312 930 1000
Toll Free: +1 866 716 7274

Global Customer Contacts

More CME Group Direct Lines
Phone list by department

Global Partnerships

Global

Global Offices Contact Information

 
Calgary Houston Chicago New York Washington São Paulo Belfast London Singapore Hong Kong Seoul Tokyo Beijing

© 2014 CME Group Inc. All rights reserved.

CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of four 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, and COMEX.