Three ways of trading oil
There are three main ways of speculating on oil price movement: futures and options, CFDs and spread betting, or investing via equities and ETFs.
Buy futures and options
To trade futures and options, you’ll need to use the right exchange for the oil benchmark you wish to trade. Most exchanges have criteria for who is allowed trade on them, so the majority of futures speculation is undertaken by professionals instead of individuals. If you want to trade options, you’ll need an options broker.
Trade via CFDs and spread betting
CFDs and spread betting enable you to deal on the changing prices of futures and options1, but without buying and selling the contracts themselves. And instead of trading on a commodities exchange, you create an account with a leveraged provider. This brings several benefits for oil traders:
- You can trade on the spot prices of oil benchmarks, as well as futures and options
- You can go both long and short on a huge variety of oil markets, on a single platform
- Spread betting is completely tax free, while CFD trading is free from stamp duty2
Find out more about how spread betting and CFD trading work.
Instead of trading individual markets, you can get exposure to oil via the shares of oil companies and oil exchange traded funds (ETFs). The prices of oil companies are heavily influenced by the price of oil, and can sometimes offer good value compared to trading oil itself. You can use ETFs to invest in oil benchmarks, or a basket of oil stocks.
Find out more about investing in oil.