PALLADIUM (NPL)
Palladium futures are a hedging tool for commercial producers and users of the metal. They also provide global price discovery and opportunities for portfolio diversification. In addition, the contracts offer:
- The benefits of central clearing, including guaranteed counterparty credit and segregation of customer funds
- Complete price transparency, giving all market participants equal access while maintaining anonymity in all bids and offers
Palladium is the other major metal of the platinum group. It is mined with platinum, and resembles it in many respects, yet there are important differences between the two metals.
Palladium is also produced as a by-product of nickel mining. Russia supplies about 2/3 of production, South Africa about ¼ and North American less than 10%.
Automotive catalysts are the largest consuming sector, accounting for 2/3 of demand. Electronic equipment, dental alloys and jewelry manufacturing also account for palladium use.
The contract is traded on the future market of CME.
Summary Contract Specifications
- Underlying value : Palladium
- Contract size: 100 ounces
- Value: Palladium price per ounce x 100
- Minimum fluctuation : 0,05 points (= $ 5 per contract)
- Delivery: physical
- Periodicity : March, June, September, and December.
- Date of expiration : the third last business day of the delivery month.
Trading example:
- Palladium quotes 440 on march 5th.
- The value of one future contract of palladium is 440 x 100 $ = 44.000 $.
- Buy at 440 and sell at 445.
- The value of one full point is 100 $
- 5 points profit = 100 x 5 $ = 500 $
