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Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
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Interesting @heraclitus thanks for the explanation. Regarding...
it would all depend upon correlation. Crude, Heating Oil and Gasoline are all highly correlated, so if one broke a trend then yes all 3 could. I assume there's similar correlations within the Ags and Metals (I think Gold & Silver correlate) but maybe to a lesser degree. And then everything correlates to the USD at times - but not all of the time.
Ah yes. See this is the sort of comment I was hoping for. I was first set on soybeans for April but then changed it to oil for the higher returns. But you have a good point there about correlation. I'm going back to soybeans for that month. Metals are also correlated, as you say. Silver - platinum at almost 70%. Hummm... Platinum - palladium is lower at about 50%. That's alright, I guess.
hello everyone,
I am new here and I'd like to partecipate since I am also trading seasonals through both futures spreads and futures options.
I'll try to post my trades and thoughts, every feedback is very welcome.
I am entering today a CL bear spread, short CLZ8 long CLM9 at around the open ( actual price should be about 2.20, with a stop loss on close above 3.50 (1300$ x contract). according to seasonalgo, this spread should move lower until end of august, and has already started its downward move.
fondamentals in crude (COT commercials short at record high levels and increase in supply) should favor this spread.
initial target at 0.0
Lorenzo
as mentioned in the short option thread, I am also short the CL using a Long CLZ P70 option.
I do not have any information about your portfolio, but make sure to avoid clump risk. 2 of your 3 positions are short CL positions. To me it is very important to have a well balanced portfolio.
Maybe I am missing something, but this spread is a negative number. Currently CML9-CLZ8 is around -1.6, and when you entered on 01-Jun it would have been roughly -2.0. I assume you mean a stop loss around -3.50. And according to seasonalgo, the spread is moving upwards over time.
Have I completely mis-understood your trade?
Edit: If you actually meant CLZ8-CML9, then it all makes more sense.
@zxcv64 the logic can be quite confusing, because as you thought, if you were selling the spread, you would think that the math would be -Z8 +M9 which as you pointed out would give you a negative number. But it works a little differently, because as @SMCJB pointed out, the construct is always Closest Month - Furthest Month.
If CL Z8/M9 was @ 2.20 and you predicted the spread would flatten (as Lorenzo did) and go towards 0.00, then you would sell Z8 and buy M9 so that the prices converge.
If Z8 is 65.20 and M9 is 63.00, spread = 2.20
If Z8 falls to 64.50 and M9 rises to 63.50, spread = 1.00
Hope this helps, I made the same mistake when learning about spreads.
