To allow a greater number of investors to trade on volatile consumer gas prices, the Chicago Board Options Exchange (CBOE) will launch “Gas at the Pump,” a futures exchange to begin trading on October 28.
“The ability to trade on or hedge against prices moves in the increasingly volatile consumer gas market was previously the domain of large institutional investors, but the launch of “Gas At The Pump” contracts will allow a broader range of investors to participate in this important market,” futures exchange managing director Patrick Fay said in a statement.
Each contract will represent 10,000 gallons, meaning If the price is $2.98 per gallon the contract will have a total value of $29,800, however, margin rules allow investors to put up only about 20 % of that amount.
The futures will trade under the ticker symbol “GP” and are based on six different contracts: one is based on the average US price for gasoline, derived from a survey of 800 stations spanning the country; the others will be based on averages of five geographic regions.
The surveys will be compiled by the Energy Department, and the expiration months for the contracts are scheduled for December, January, March and June.