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How to Trade Micro WTI Crude Oil Futures Contracts

January 4, 2022 by Daniels Trading| Tips & Strategies

When it comes to commodities, energies are an exceedingly popular asset class. And, within the energies segment, West Texas Intermediate (WTI) crude oil is a go-to product for many active traders.

Let’s take a closer look at CME Micro WTI futures. Read on to learn more about this exciting contract and to discover a few tips on how to trade futures based on “Texas tea.”

The Launch of CME Micro WTI Futures

The Chicago Mercantile Exchange (CME) has a storied history of developing new derivatives markets. One of the CME’s more intriguing innovations came in 2019 with the launch of Micro E-mini equities futures.

The CME’s idea behind introducing Micro E-mini equities was to provide traders a way of engaging DOW, S&P 500, NASDAQ, and Russell 2000 futures on a reduced scale. Ultimately, the Micro E-minis were well received. Traded volumes rapidly grew, establishing a daily handle of more than 4 million contracts multiple times (February 2021).

According to the CME Group’s Tim McCourt, Micro E-mini equities quickly became a resounding success:

“Since their introduction in May 2019, we’ve seen strong growth and participation across Micro E-mini Equity Index futures and options, including among sophisticated, active traders.”

Learn the basics of trading crude oil futures and understand the top reasons  for participating in this exciting market in our guide. Get it here ->>

In an attempt to capitalize on the demand for smaller futures contracts, the CME turned its attention toward one of its benchmark products: WTI crude oil. Since their July 2021 debut, Micro WTI crude oil futures have exhibited their growth potential. Within a month, CME Micro WTI futures exceeded 1 million traded contracts, making it one of the exchange’s featured products.

Contract Specifications

If you’ve ever read a book on how to trade futures, then you’ve been briefed on the topic of contract specifications. Contract specifications formally outline the details of the agreement being made between the contract’s buyer and seller. Without a set of specs, a futures contract would be more like a pari-mutuel wager, not a standardized security.

Here are the key specs for the CME Micro WTI contract:

Symbol MCL
Market CME Globex
Denomination 100 barrels
Minimum Tick U.S. dollars and cents
Tick Value $1.00 per tick
Listing Monthly for 12 consecutive months and an additional June and December
Settlement Financial

Micro WTI futures are traded electronically on the CME Globex from Sunday at 6:00 p.m. EST to Friday at 5:00 p.m. EST. Also, it’s important to note that the market is halted for one hour every day between 5:00 p.m. EST and 6:00 p.m. EST. As long as the market is open for business, you are free to buy and sell MCL via mouse click, bracket order, or automated system.

Why Trade Micro WTI Crude Oil Futures?

Often, traders are so concerned with learning how to trade futures that they forget all about the why. For the Micro WTI, there are many reasons to actively buy and sell contracts:

Market depth and volatility

WTI futures are among the CME’s most popular commodity futures offerings. As a general rule, WTI experiences robust participation and consistent volatility between the hours of 9:00 a.m. EST and 2:30 p.m. EST. Because Micro WTI futures are based on the standard WTI contract, these hours offer participants ideal trading conditions.

Capital efficiency

Micro WTI margin requirements are vastly reduced when compared to the full-sized WTI. Initial margins are in the neighborhood of $550, whereas intraday margins are typically less than $300. So, for a minimal capital outlay, you can become active in the global oil complex and control positions far in excess of dedicated capital.

Customizable exposure

For active traders, the term granularity refers to the incremental increase or decrease of a position’s size. The Micro WTI contact gives you optimal granularity because you can adjust position sizes up or down in small increments. The result is fully customizable market exposure via tailored position sizing.

Freedom

The reduced maintenance margins and granularity of Micro WTI crude open the door to countless trading strategies. For instance, you’re free to scale in and out of multi-lot positions on intraday, swing, or longer-term time frames. With Micro WTI futures, the sky is your strategic limit!

At one-tenth the size of conventional WTI futures, the Micro WTI contract provides energy traders with the utmost flexibility. From long-term investment and portfolio management to intraday scalping, you can adapt Micro WTI crude oil futures to a wide range of situations.

Want to Learn How to Trade Futures and Crude Oil?

If you’re interested in learning how to trade futures, then you’d be well-advised to first understand market dynamics before hitting that “Buy” or “Sell” button. Fortunately, for oil traders, the StoneX e-book Introduction to Oil Futures has the global energy complex covered.

Introduction to Oil Futures takes a deep dive into the benefits of trading crude oil, contract specs, market fundamentals, and much more. If you’re gearing up to take the plunge into the global oil complex, be sure to download your free copy without delay!

Introduction to Crude Oil Futures

Filed Under: Tips & Strategies

About Daniels Trading

Daniels Trading is division of StoneX Financial Inc. located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading was built on a culture of trust committed to a mission of Independence, Objectivity and Reliability.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2022 StoneX Group Inc. All Rights Reserved

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Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2022 StoneX Group Inc. All Rights Reserved

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