I was looking to buy oil futures because I expect the price to go up. But in my Robinhood App it says that the “margin requirement” is over $24,000. does that mean I need to have $24,000 in my account to buy in? I’ve never traded commodities before.
there is also a “multiplier” next to it, currently at 3.9. As I read it, does that mean gains or losses are multiplied 3.9 times if I do not post the full $24,000 amount?
What does “margin requirement” mean on an oil futures contract?
byu/Plastic-Injury8856 ininvesting
Posted by Plastic-Injury8856
2 Comments
It seems you probably need to get a bit more educated before investing in oil futures (and I get that’s what you’re trying to do with this post).
A full crude contract has a face value of about 100k right now. Your broker requires 24k in cash to buy one contract for a leverage of about 400%.
If crude drops to $75 per barrel all your money is gone. But in reality they will sell it before then if you can’t deposit more money to maintain their margin requirement.