Futures For You by Carley Garner
TRADING FUTURES SPREADS (PART 2 oF 2)
Could you explain the lingo and basic strategy behind trading futures spreads in the commodity markets?
As I discussed last month in this column, futures spread trading strategies deliver a method of speculation with generally mitigated risk. This is because each futures spread trade involves both the purchase and sale of the same commodity with differing expiration months (intracommodity spread) or related but different commodities (intercommodity spread). Despite being a relatively tame approach to participating in the futures markets, spread trading is far from being “easy-peasy.” Let’s look at a few logistical and strategy challenges...