any thoughts?...what do most of you do..front month and next by month?...2 months out and 5 months etc....thanks...
I am a scalper in CL but I keep an eye on the spreads. The movement of spreads is always greater in magnitude in the fist and next month and lessening with each successive pair(at least that is my observation). Also the liquidity may be spotty as one goes further out. According to an other poster carry is about -200 pts per month but at times the spread goes well below -200 and at other times it was near backwardation. The spread does not always tighten with a price rise which makes it more interesting . For scalping and daytrading purposes stay with the front month. For spreads it would depend on the strategy. Because CL is trading for expiry in every calendar month it should be a great spread market with lots of opportunities for the early birds (or maybe it is a developed institutional market already?) I can hardly wait until option orders can be submitted electronically. Regards, GC
The -2.00 level exceeds the cost of carry in crude, I believe. I think the true cost of carry is closer to 50 cents, and a spread value that exceeds this represents contango...