Oskeewow

Newbie
7 0
moka, you can do it either way. The butterfly increases your exposure to the middle leg, so if that happens to be where the pressure is, you will feel the extra pain. With the box, you're more spread out over the curve. But you may find a more tradable market in the exchange-traded butterfly,

As JS said though, you should always have a quitting point. You buy the one spread, sell the next, and your box still keeps running, you can try selling another spread, but you might just be set up on the wrong side, and no hedge will get you out of it.

Maybe you would set an initial stop at 10 ticks on your spread, but you'll add a hedge if it goes 2 ticks or 5 ticks, or at some technical point, or add partial hedges every few ticks along the way. At this point, you no longer have a one-stop shop for a stop loss order. So you'll have to recalculate the stop price of your whole position to keep it inline with the original dollar value of the original stop.
 

just spreads

Newbie
9 0
All things considered, if a trade was not meant to be (profitable or to your expectation) it doesn't matter how many or types i.e. options of additions you implement. You are essentially relying on hope for the market to come good and not exercising proper trade/money management. I think this thread has brought up some relevant discussion points but I suggested not to use options in the first instance. Using options is a viable consideration but outside the initial point of this topic.
 

Mahyar

Newbie
1 0
Spread trading: Less volatility = less risk = less return. The expected profit/risk is actually not as good as one should think.

You might be better of investing in corporate bonds.

Or else, good old technicals + fundamentals = Highest expected return/risk (If traded rational offcourse)
 

just spreads

Newbie
9 0
We all have different ideas on risk. My deliberate focus on trading just calendar spreads is meant for those that have actually traded for themselves. These are the people that will recognize the advantages of this type of spread trading.
 

ULJUH

Junior member
10 0
Hi, does anyone know the reason for the big fall in brent first month spreads. The loading program got out today and it was pretty neutral with 20 cargoes. But still the spreads kept falling.
 

just spreads

Newbie
9 0
I'd like to reply to your query properly. Brent oil has dropped $10 dollars in the last 30 days, so can you explain #1 - what you mean by 'big fall' in first/front month spreads i.e. widen or narrow? #2 Does loading program and 20 cargoes refer to the physical delivery of oil? Please note EU is statistically in a recession, China has reduced foreign oil imports and the US is more a self-sufficient oil producer and have shifted to Nat Gas.
 

ULJUH

Junior member
10 0
I'd like to reply to your query properly. Brent oil has dropped $10 dollars in the last 30 days, so can you explain #1 - what you mean by 'big fall' in first/front month spreads i.e. widen or narrow? #2 Does loading program and 20 cargoes refer to the physical delivery of oil? Please note EU is statistically in a recession, China has reduced foreign oil imports and the US is more a self-sufficient oil producer and have shifted to Nat Gas.
Hi,
#1 I mean the spreads narrowed from 1.05 to 0.75 in 2 days. eSignal.com free world stock market quotes and charts
#2 Yes I was referring to the CFDs or the physical market. Brent Crude April Program 100,000 B/D, Down From March - Traders | 4-Traders Thanks
 

just spreads

Newbie
9 0
I can provide an answer to your original query i.e. Hi, does anyone know the reason for the big fall in brent first month spreads? This is most likely due to market perception that prices will continue to fall, therefore the deferred months come closer in price (narrow) to the front month. Also, the cost to carry oil is less due to lower and sustained interest rates.
 
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