Home > Palladium Bullion Guide > Palladium Investing

Palladium Futures

A palladium futures contract is a contract to buy or sell a specific weight of palladium at a designated time in future, at an agreed price defined at the time the contract is entered. 

Palladium futures contracts were originally designed to protect large industrial users of the precious metal from adverse price swings by enabling them to obtain or supply a steady quantity of palladium at established prices in order that their respective businesses will be able to make a profit. 

Members of the public buying palladium futures are usually speculators betting on the near term direction of the price of palladium. They will buy palladium futures when they believe that the price of the metal will rise and sell them when they think it will fall. Palladium futures traders don't actually have to own or take delivery of the physical metal. They can just pay (or receive) the valuation difference in cash on delivery date by selecting the cash settlement option upon entering the trade. 

As futures trading account typically provide significant leverage, the associated profit potential as well as the risk involved can be very high. As an example, purchasing palladium futures allow the investor to control $20000 worth of palladium by merely paying only $5000 upfront.

Investors are advised to exercise due caution if they wish to venture into this highly speculative way of playing the palladium market. The risk of trading palladium futures is very high, especially for those who are uninitiated in the intriques of options and futures trading. Less aggressive palladium investors are advised to stick to buying palladium ETFs or the stocks of palladium producers.

Palladium Futures Trading

Palladium futures are traded in futures exchanges worldwide. Below is a summary of palladium futures contracts traded in major futures exchanges worldwide.

Standard Palladium Futures Contracts

Exchange Symbol Contract Size Min. Price Fluctuation Initial Margin
New York Mercantile Exchange (NYMEX) PA 100 troy ounces US$0.05 (5ยข) per troy ounce, equivalent to $5.00 per contract approx 16%,
subject to change.
(see full contract specs.)
Tokyo Commodities Exchange (TOCOM) Not Available 500 grams (approximately 16 troy ounces) JPY 1 per gram (500 japanese yen per contract) approx 24%,
subject to change.
(see full contract specs.)

How to Start Trading Palladium Futures

To buy or sell palladium futures, you need to open a trading account with a broker that handles palladium futures trades. Most online brokerages out there only deal with stocks and stock options. Only a few such as TD Ameritrade lets you trade futures and futures options as well. TD Ameritrade also provide a virtual trading platform where beginners can try out futures and options trading in real market conditions without using real money.