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<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\nAre Inter Commodity Spreads Right for you?<\/h1>\n
Are Inter Commodity Spreads Right for you?<\/h1>\nBy John Thorpe, Senior broker<\/div>\n<\/div>\n\nUsed alone as a strategy or as a hedge<\/a> over the weekend or longer..<\/div>\nYou can still hold volatile positions at reduced margins<\/a> by employing exchange recognized spreads<\/a>.<\/div>\n<\/div>\nYou can trade similar products but from different sides of the ledger, long vs short<\/div>\n<\/div>\nExample, Corn<\/a> vs Wheat<\/a> ratio 2:1<\/div>\nNotes<\/a> vs Bonds<\/a>, Ratio\u00a02:1<\/div>\nIndex futures<\/a> vs each other 1:1<\/div>\n<\/div>\nSome traders use these as stand alone strategies, others use them as hedges to straddle a time period,\u00a0perhaps you don\u2019t want full exposure during an important report but still like your entry price on one leg.<\/div>\n<\/div>\nIf this is the case you may offset a part of the risk with a different but similar product and receive a margin break for reducing your overall risk.<\/div>\n<\/div>\n\u00a0Inter Spreads are calculated as a percentage of Credit off the top of the full outright margin of the products that make up the legs of the spread.<\/div>\n<\/div>\nNQ Mini Nasdaq<\/a> 100 vs. YM Mini Dow<\/a> with a ratio of 1:1 –\u00a055% Inter rate<\/div>\nOutright rates<\/div>\nNQ 17,000\u00a0\u00a0\u00a0\u00a0YM 9,000<\/div>\n17,000+9.000=\u00a026,000\u00a0outright margin before SPAN inter spread credit is applied<\/div>\nWith the inter spread credit applied to each leg of the spread, there is a savings of $11,750<\/div>\n\u00a0( 17,000 x .55) = 9350 + (9000 x .55) = 4950 = 14,300<\/div>\n<\/div>\n<\/div>\n![\"\"](\"https:\/\/files.constantcontact.com\/3dc00ef7001\/a4c99697-f292-4c8c-b5b2-3e6d6ecf27a5.png\" "\\"\\"")
<\/div>\n<\/div>\n\nOf course, you can apply the same logic to the micro contract\u00a0at 1\/10th the size.<\/div>\nMNQ vs MYM\u00a0= overnight requirement of\u00a0$1430.00 rather than 1700.00 for the outright MNQ<\/div>\nThere are hundreds if not thousands of combination based on correlated relationships that are recognized by the exchange. Please call your Broker or ,if you don\u2019t have an account yet and would like to know more,\u00a0call Cannon +1 310 859 9572\u00a0and we will be happy to spend time with you about this different way to manage your trading risk.<\/div>\n<\/div>\n <\/p>\n
Good Trading<\/strong><\/h3>\nTrading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.\u00a0 You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.<\/p>\n
<\/p>\n
Futures Trading Levels<\/strong><\/h3>\n9-28-2021<\/strong><\/p>\n![\"Support](\"https:\/\/files.constantcontact.com\/3dc00ef7001\/9d44838c-a070-45d5-bcf1-212de0fa8f8e.png\" "\\"\\"")
<\/div>\n<\/h3>\nEconomic Reports, source:\u00a0<\/strong><\/h3>\n
<\/div>\n
\n
Used alone as a strategy or as a hedge<\/a> over the weekend or longer..<\/div>\n
You can still hold volatile positions at reduced margins<\/a> by employing exchange recognized spreads<\/a>.<\/div>\n
<\/div>\n
You can trade similar products but from different sides of the ledger, long vs short<\/div>\n
<\/div>\n
Example, Corn<\/a> vs Wheat<\/a> ratio 2:1<\/div>\n
Notes<\/a> vs Bonds<\/a>, Ratio\u00a02:1<\/div>\n
Index futures<\/a> vs each other 1:1<\/div>\n
<\/div>\n
Some traders use these as stand alone strategies, others use them as hedges to straddle a time period,\u00a0perhaps you don\u2019t want full exposure during an important report but still like your entry price on one leg.<\/div>\n
<\/div>\n
If this is the case you may offset a part of the risk with a different but similar product and receive a margin break for reducing your overall risk.<\/div>\n
<\/div>\n
\u00a0Inter Spreads are calculated as a percentage of Credit off the top of the full outright margin of the products that make up the legs of the spread.<\/div>\n
<\/div>\n
NQ Mini Nasdaq<\/a> 100 vs. YM Mini Dow<\/a> with a ratio of 1:1 –\u00a055% Inter rate<\/div>\n
Outright rates<\/div>\n
NQ 17,000\u00a0\u00a0\u00a0\u00a0YM 9,000<\/div>\n
17,000+9.000=\u00a026,000\u00a0outright margin before SPAN inter spread credit is applied<\/div>\n
With the inter spread credit applied to each leg of the spread, there is a savings of $11,750<\/div>\n
\u00a0( 17,000 x .55) = 9350 + (9000 x .55) = 4950 = 14,300<\/div>\n<\/div>\n
<\/div>\n<\/div>\n
<\/div>\n<\/div>\n
\n
Of course, you can apply the same logic to the micro contract\u00a0at 1\/10th the size.<\/div>\n
MNQ vs MYM\u00a0= overnight requirement of\u00a0$1430.00 rather than 1700.00 for the outright MNQ<\/div>\n
There are hundreds if not thousands of combination based on correlated relationships that are recognized by the exchange. Please call your Broker or ,if you don\u2019t have an account yet and would like to know more,\u00a0call Cannon +1 310 859 9572\u00a0and we will be happy to spend time with you about this different way to manage your trading risk.<\/div>\n<\/div>\nGood Trading<\/strong><\/h3>\n
<\/p>\n
Good Trading<\/strong><\/h3>\nTrading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.\u00a0 You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.<\/p>\n
<\/p>\n
Futures Trading Levels<\/strong><\/h3>\n9-28-2021<\/strong><\/p>\n<\/div>\n<\/h3>\nEconomic Reports, source:\u00a0<\/strong><\/h3>\n
9-28-2021<\/strong><\/p>\n<\/div>\n<\/h3>\n
Economic Reports, source:\u00a0<\/strong><\/h3>\n
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