Crack

DEFINITION of 'Crack'

A trading strategy used in energy futures to establish a refining margin.

BREAKING DOWN 'Crack'

By simultaneously purchasing crude oil futures and selling petroleum product futures, a trader is attempting to establish an artificial position in the refinement of oil, created through a spread.

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RELATED FAQS
  1. Why do oil stock prices drop?

    Doesn't lower oil prices mean more profit for companies that use oil products?  ... Read Answer >>
  2. How would child support payment that I receive affect my debt ratio on a refinance?

    My husband is not on the home loan with me, and I am trying to refinance my home.  ... Read Answer >>
  3. What does a futures contract cost?

    Learn about values of futures contracts and the initial margin a trader must place in an account to open a futures position, ... Read Answer >>
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