How do you decide...(Newbie question)

Discussion in 'Commodity Futures' started by Energysfuture, Jan 7, 2010.

  1. What is your strategy when deciding which futures month to buy or sell? I've been wondering, let's say if the current month is December, what would make someone buy a February vs a March vs an April futures contract?
  2. Bear in mind energies are used for hedging, so some trades are hedge trades and the month chosen has to do with desired physical delivery dates.

    Other speculative traders spread between contract months. I'm sure there are other possibilities too, including the simple fact that some speculators may have a longer outlook/timeframe and simply want a later expiration to allow his/her strategy to play out.
  3. Some traders feel more comfortable buying deferred futures in an inverted market and/or short-selling deferred futures when there is a lot of "carry" priced into the market hoping for stability and favorable price convergence to the front-month. :cool:
  4. That's what I suspected. Thanks.