{"id":6943,"date":"2025-04-22T07:25:09","date_gmt":"2025-04-22T07:25:09","guid":{"rendered":"https:\/\/www.alcircle.com\/blog\/?p=6943"},"modified":"2025-04-22T07:25:11","modified_gmt":"2025-04-22T07:25:11","slug":"hedging-with-jorge-episode-50-lme-delivery-what-happens-if-you-dont-close-your-futures-position","status":"publish","type":"post","link":"https:\/\/www.alcircle.com\/blog\/hedging-with-jorge-episode-50-lme-delivery-what-happens-if-you-dont-close-your-futures-position","title":{"rendered":"Hedging with Jorge #Episode 50: LME delivery &#8211; What happens if you don\u2019t close your futures position?"},"content":{"rendered":"\n<p>In Jorge&#8217;s blog, we\u2019re diving into the third crucial role of the London Metal Exchange (LME): delivery. If you\u2019ve ever wondered what happens if you don\u2019t close your futures position on time, this one\u2019s for you.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"youtube-embed\" data-video_id=\"7wB3IBjwduE\"><iframe loading=\"lazy\" title=\"Hedging with Jorge #Episode 50: LME delivery - What happens if you don\u2019t close your futures position\" width=\"696\" height=\"392\" src=\"https:\/\/www.youtube.com\/embed\/7wB3IBjwduE?feature=oembed&#038;enablejsapi=1\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p>Let\u2019s start with a simple scenario. Suppose you\u2019ve taken a long position in the aluminium futures market, expecting prices to rise. Let\u2019s say you bought aluminium futures for next week. Here\u2019s the key rule: you must close your futures position two days before expiry.<\/p>\n\n\n\n<p><strong>What if you don\u2019t close it in time?<\/strong><\/p>\n\n\n\n<p>If you forget or choose not to close it, your broker will call you. Why? Because they need to know your plan: Are you taking delivery of the metal or not?<\/p>\n\n\n\n<p><strong>And this brings us to the main takeaway: <\/strong>delivery is a real option on the LME. That means, if you\u2019re still long when the position expires, you\u2019ll be expected to take delivery of the physical aluminium.<\/p>\n\n\n\n<p><strong>Let\u2019s crunch some numbers<\/strong><\/p>\n\n\n\n<p>Suppose you bought 100 tonnes of aluminium, which equals four lots, for $2,300 per tonne. That means you owe $230,000 to your broker. Once you make the payment, your broker will deliver to you something called a warrant.<\/p>\n\n\n\n<p><strong>What is a warrant?<\/strong><\/p>\n\n\n\n<p>A warrant is a certificate of deposit that proves ownership of the metal. In this case, you\u2019ll receive four warrants, each representing 25 tonnes of aluminium.<\/p>\n\n\n\n<p><strong>Now comes the next big question:<\/strong><\/p>\n\n\n\n<p><strong>Where is aluminium?<\/strong><\/p>\n\n\n\n<p>Don\u2019t assume all 100 tonnes are sitting neatly in one warehouse near you. The LME has a network of warehouses spread across 14 countries and 32 locations. So, your metal could be anywhere within that global system.<\/p>\n\n\n\n<p>And that\u2019s where things get interesting and potentially complex.<\/p>\n\n\n\n<p>Wondering what to do next with your warrants or how delivery impacts your trading strategy? Stay tuned. In the next episode of Hedging with Jorge, I\u2019ll break it down step-by-step.<\/p>\n\n\n\n<p>Until then, keep hedging smart!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In Jorge&#8217;s blog, we\u2019re diving into the third crucial role of the London Metal Exchange (LME): delivery. If you\u2019ve ever wondered what happens if you don\u2019t close your futures position on time, this one\u2019s for you. Let\u2019s start with a simple scenario. Suppose you\u2019ve taken a long position in the aluminium futures market, expecting prices [&hellip;]<\/p>\n","protected":false},"author":89,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-6943","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-open-forum-for-aluminum-community-blog"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The third crucial role of the London Metal Exchange (LME) delivery.<\/title>\n<meta name=\"description\" content=\"the third major function of the LME delivery, Ever wondered what happens if you don\u2019t close your long aluminium position before expiry.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.alcircle.com\/blog\/hedging-with-jorge-episode-50-lme-delivery-what-happens-if-you-dont-close-your-futures-position\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The third crucial role of the London Metal Exchange (LME) delivery.\" \/>\n<meta property=\"og:description\" content=\"the third major function of the LME delivery, Ever wondered what happens if you don\u2019t close your long aluminium position before expiry.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.alcircle.com\/blog\/hedging-with-jorge-episode-50-lme-delivery-what-happens-if-you-dont-close-your-futures-position\" \/>\n<meta property=\"og:site_name\" content=\"AL Circle Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AlCircle\" \/>\n<meta property=\"article:published_time\" content=\"2025-04-22T07:25:09+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-04-22T07:25:11+00:00\" \/>\n<meta name=\"author\" content=\"Jorge Eduardo Dyszel\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@alcircle\" \/>\n<meta name=\"twitter:site\" content=\"@alcircle\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Jorge Eduardo Dyszel\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode-50-lme-delivery-what-happens-if-you-dont-close-your-futures-position#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode-50-lme-delivery-what-happens-if-you-dont-close-your-futures-position\"},\"author\":{\"name\":\"Jorge Eduardo Dyszel\",\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/#\\\/schema\\\/person\\\/64371a8562aa8589375f4f9a8c08a9f6\"},\"headline\":\"Hedging with Jorge #Episode 50: LME delivery &#8211; 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