Copper Update
COMEX COPPER FUTURES (HG) AND OPTIONS (HX) RECENT DEVELOPMENTS
Copper futures (HG) open interest hit numerous record-highs this year, including an all-time high of 337.9K lots on August 16
As open interest surged amid a steady decline in the value of the dollar, as well as an expected increase in demand from China, the world’s top consumer of the red metal according to the World Bureau of Metal Statistics, prices climbed to the highest level in more than two years.
Over 100K contracts (1.14 mil mt) of COMEX Copper futures trade every day.
Average daily volume in Copper futures exceeded 140K lots in November 2017.
The marketplace for Copper futures is divided among a diverse group of participants.
There has been a substantial rise in hedging by producers and money managers using Copper futures, per CFTC Commitment of Traders report as of 3 October 2017
Leverage Copper Liquidity Around the Clock No Matter the Time-Zone
Volume continues across time zones; copper is a truly global market.
99% of Copper futures volume is traded electronically on CME Globex. Trading access has never been easier.
Established Regulatory Regime
Established and long-standing regulatory regime.
CME Group is regulated by the CFTC
Clearly defined procedures on position limits and hedge exceptions
CME Group’s Regulatory Outreach Program provides market participants with the information and resources necessary to meet their compliance needs. For more information, contact our Market Regulation department at marketreg.outreach@cmegroup.com
Rising Copper Stocks – Financing Opportunity
COMEX Copper inventory reached 200,485 mt on 6 October, the highest level since April 2004..
Warrant financing activity has increased which is supported by the growing inventory.
Copper warehouses and physical delivery are available in 7 states in the U.S.
12 warehouse companies are approved for COMEX Copper storage.
Spot month position limit was increased to 1,200 contracts effective August 2017
Benefit from Copper Margin Offsets
Potential Significant Savings
The initial margin charge on a Copper futures contract could be partially offset if you have the opposite position in another commodity contract cleared through the same FCM at CME Group. Copper could be offset with a majority of liquid commodity contracts,including base and precious metals, as well as ferrous, energy, FX and equity index products.
Copper Options – a Transparent and Efficient Way to Trade
Narrow bid-offer on CME Globex
Instantly monitor prices, implied volatility and greeks in real-time on CME Direct
Explore the world of advanced Copper analytics with value-added QuikStrike tools
RFQ functionality on CME Globex allows you to electronically execute multi-leg and hedged options strategies for COMEX Copper.
Access the Global Copper market at CME Group
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
