Propane is a colorless gas found in petroleum and natural gas. This is mainly used as a fuel and as like any other commodity, they are also traded on the markets. Propane futures are the future estimated market value of the actual commodity Propane, and are traded in the market on a delivery basis. It can be bought and sold on the market on a day-to-day basis or a contract can be obtained to take future delivery of propane at a specified date. On the expiration of the contract date, the actual commodity is delivered to the dealer. However, the trader does not take physical delivery of the commodity in most cases. He rolls over the futures before expiry, i.e. he sells the existing futures and purchases new futures pertaining to a future date.
These futures are traded in the New York Mercantile Exchange just like any other commodity like crude and petroleum. It is traded from 9.20 am to 1.10 pm (Eastern Standard Time) in the mercantile exchange from Monday to Friday. The contract size is 1000 barrels/ 42000 gallons and the futures are traded for this quantity only. They are traded under the symbol PN and it can be bought and sold in US dollars only in the mercantile exchange. The futures are delivered all through the year, though the ticker symbol can vary for each month. For example, the symbol is PNF9 for January 2009, PNG9 for February 2009 and so on.
While trading in propane futures, there are some aspects that must be kept in mind. There is a daily price limit of $0.25 per gallon or $10,500 per contract. If the futures contract is offered at this price for five minutes or longer, then the trading halts. When it resumes again, the limit will be increased by another $0.25. Trading for a particular month ends on the last working day preceding the date of delivery.
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