Mini WTI and Micro WTI are variations of WTI futures contracts, differing primarily in contract size. They provide more flexible trading conditions compared to standard WTI futures, offering smaller contract sizes and lower margin requirements. As a result, individual traders can participate in WTI trading through these instruments.
This article will compare the contract details between the mini WTI and the micro WTI from various aspects. Key takeaways:
- There are three variations of WTI futures traded on CME: standard CL, mini CL, and micro CL.
- The contract size of micro CL is 100 barrels, only one-tenth that that standard CL.
- The trading margin of micro CL starts from $375, making it attractive to many individual traders.
WTI Futures or CL Futures
Both WTI futures and CL futures are commonly referenced in finance news, but are there any differences bwteen them? CL, representing Crude Oil, serves as the product code for WTI crude oil futures. Therefore, when you hear about CL futures, it’s essentially referring to futures contracts tied to WTI crude oil.
Some may question why WTI futures utilize “CL” as the product code, given that crude oil encompasses various types produced in different regions, such as Brent and Dubai crude. The rationale behind this is straightforward: WTI futures hold the distinction of being the world’s first crude oil futures.
Mini and Micro WTI Futures
There are three types of WTI futures: the standard CL futures (Crude Oil Futures), the mini CL futures (E-mini Crude Oil Futures), and the micro CL futures (Micro WTI Crude Oil Futures). Their distinctions lie in both contract size and settlement method.
1). Difference Contact Size
| Standard WTI Futures (Crude Oil Futures) | Mini WTI Futures (E-mini Crude Oil) | Micro WTI Futures (Micro WTI Crude Oil) |
|
|---|---|---|---|
| Symbol | CL | QM | MCL |
| Contract Size | 1000 barrels | 500 barrels | 100 barrels |
The contract size of micro WTI futures is 100 barrels, caterring to individule or retail traders who prefer to trade reduced exposure. The mini WTI is in an awkward position, because small investors typically opt for the micro WTI, while institutional and professional traders tend to favor the standard futures.
This is evident in the trading volume, with the mini CL consistently exhibiting the lowest activity compared to the other two. CME may consider delisting the mini CL someday in the future.
2). Physical VS Cash Settlement
| Stardard WTI Futures | Mini WTI Futures | Micro WTI Futures | |
|---|---|---|---|
| Volume | 457,281 contracts | 16,103 contracts | 132,778 contracts |
| Settlement | Physical WTI Delivery | Cash Settlement | |
Physical crude oil delivery is involved for the open positions of the standard WTI futures upon expiry. In contrast, both mini and micro WTI futures are settled in cash on the expiry date, with no physical delivery occurring.
Expiry Date of Micro & Mini CL
Both mini CL and micro CL futures are monthly contracts that expire on a monthly basis, with multiple contracts for different months listed at the same time.
The front month contract is named after the current month and typically garners the highest volume, as most participants manage their risk exposures on a monthly basis.
The expiry dates vary among the standard, mini, and micro WTI futures:
- The standard CL: 3 business day before the 25th calendar day of the month prior to the contract month
- Mini CL & micro CL: 4 business days before the 25th calendar of the month prior to the contract month
Let’s consider an example for the APR 2024 contract of the standard CL. Its expiry date would be 20th March 2024. In other words, this futures contract represents the WTI price delivered on 20th April 2024.
Mini & Micro WTI Contract Value
The contract value, which represents the USD value for one mini/micro WTI futures, is a crucial factor in determining the trading margin requirements. This value fluctuates in accordance with the market price:
WTI Futures Contract Value = Contract Size × WTI Price
We will analyze the contract value for the three types of WTI futures when the market price is $80 per barrel:
| Standard WTI Futures | Mini WTI Futures | Micro WTI Futures | |
|---|---|---|---|
| Contract Size | 1000 barrels | 500 barrels | 100 barrels |
| Contract Value | $80,000 | $40,000 | $8,000 |
The value of standard and mini WTI futures may be too high for individual traders, whereas micro WTI futures lower the value to a more accessible level for some individuals.
Margin of WTI Futures
As mentioned in the previous section, the contract value of the cheapest WTI futures remains at $8,000, which is often beyond the reach of many individual traders. However, futures trading requires only a small margin. Presently, the minimum margin requirement for micro WTI is $375.
CME and futures brokers may adjust the margin periodically, based on market volatility. The table below compares the margin requirements for CL, mini CL, and Micro CL when WTI is trading at $80.
| Daytrading | Overnight | |||
| Initial Margin | Maintanance Margin | Initial Margin | Maintanance Margin | |
| Standard WTI Futures | $3,850 | $3,500 | $7,700 | $7,000 |
| Mini WTI Futures | $1,925 | $1,750 | $3,850 | $3,500 |
| Micro WTI Futures | $375 | $350 | $750 | $700 |
The minimum margin for the standard CL is $3,850, and $1,925 for mini CL, both of which are still too high for many individual traders. However, micro CL futures only require $375 as the initial margin, significantly lowering the threshold to a level where many individuals can afford to participate.
Looking for lower margin requirement to trade WTI? Start trading through CFDs with just a $1 margin. Click and read「Exploring USOIL in Forex Trading: How to Trade WTI CFD on MT4」for details.
Tick Value of Micro WTI
As explained earlier, micro WTI futures is the most affordable variation in terms of margin for individuals. Now, let’s examine whether it is also individual-friendly from the perspective of tick value.
The screenshot below displays the pricing of Micro WTI, indicating that it employs pricing with two decimals and a tick size of 0.01. These specifications are consistent with both standard and mini WTI futures. However, the tick value varies among the three futures.
Using the contract size and tick size, we can perform a simple calculation to determine the tick value of micro WTI, which amounts to $1. While WTI prices can exhibit volatility, a $5 dailly change still represents a substantial move that rarely occurs. With a $5 change in price, the resulting profit or loss for one contract of Micro WTI would amount to $500. A maximum $500 daily profit or loss is still managable for many individule traders.
WTI Futures Trading Hours
All three variations of WTI futures are traded electronically on CME, operating 23 hours a day, 5 days a week. The extended trading hours are a crucial factor that contributes to WTI futures being the most traded commodity futures. This accessibility allows anyone from around the world to conveniently participate in trading according to their respective time zones.
| WTI Futures Trading Hours (GMT + 8) | ||
|---|---|---|
| US Daylight Saving | US Winter Time | |
Trading Hours | Mon 06:00 AM - Sat 5:00 AM, one hour daily break: 05:00 AM - 06:00 AM | Mon 07:00 AM - Sat 6:00 AM, one hour daily break: 06:00 AM - 07:00 AM |
uring the period of US daylight saving time, which begins on the second Sunday of March and ends on the first Sunday in November, WTI futures trading hours are from 6 AM on Monday to 5 AM on Saturday. However, during US winter time, the trading hours are adjusted backward by one hour.
WTI Futures VS WTI CFD
Apart from micro WTI futures, another WTI derivative that allows individual traders to speculate on the WTI price with a low margin requirement is the WTI Contract for Differences (CFD).
WTI CFDs are a type of derivative that enable traders to speculate on the price movement of WTI without the need to open a position in the underlying market. Below is a comparison of key factors between micro WTI futures and WTI CFD:
Micro WTI futures
Minimum margin requirement: $375
Mininum trading size: 1 lot (100 barrels)
WTI CFD
Lowest margin requirement: $1
Minimum trading size: 0.01 lots (1 barrel)
For the details of WTI CFD, please refer to 「Exploring USOIL in Forex Trading: How to Trade WTI CFD on MT4」.
