There's good money to be had spread trading futures. I'm referring to ALL futures - softs, metals, energies, equities, and capital markets. The available leverage, liquidity, and relatively low transaction costs makes spread trading profitability viable with futures. Even if you're not a market-maker. It's just not well understood by many folks off the floor or away from fund/portfolio management, dealing desks, and commercial activities.
But it is simple to learn for anyone interested. Just get ahold of series #3 study materials. Especially if you understand option trading. It is really not complicated. .....hell, just watch "Trading Places" RS7
In that particular movie Valentine did not need anything, including series #3 materials. He just knew what market was doing Funny story, however some people really believe this is possible
I don't recall those guys spreading anything with respect to FCOJ futures. They just speculated on flat price. Poor analogy.
Spreads are great. I make a living at it. Every day. Three kids, wife, house on the North Shore, all that crap. Swear to God. Used to be an Engineer in the Loop. Started trading futures spreads. Spreads, especially in the futures market, are truly underestimated for consistent profitability. I submit for your consideration a few select spreads. I like the way they trend, I like the fundamentals, I like the technicals, I like the fact that they have purpose - in other words, big commercials HAVE to do them... : 1) Eurex Schatz / Eurex Bund; Ratio 4:1 2) Nymex Aug. '02/ Aug. '03 Crude; Ratio 1:1 3) CME Sept. '02 S&P / Eurex DJ EuroStoxx 50 Sept. '02; Try a Ratio of 1:1, but not quite certain 4) CBOT Sept. '02 TY Note / Eurex Sept. '02 Bund; Ratio 1.1:1 5) CBOT Sept. '02 Five Year Note / Ten Year Note; Ratio 1.6:1 Pure Sweetness.
Bone - Can you provide any good resources (books, websites, software, movies ) where one can learn more about this? Thanks.
There's another thread going on right now where everybody's taking a giant piss all over Bloomberg. Who do you think supports Bloomberg?
Bone, when you talk about futures spreads are you talking about putting them on and holding them for more than intraday? I was on the floor in NYBOT and I remember an awful lot of traders who traded intermonth spreads -Long jul crude vs. Oct heating oil, long sept sugar against dec sugar. These traders seems to do great for 1-3 years then give it all back in 1 week because the market gods seem to coax these traders to have their biggest positions at the point when the spreads stopped reverting to the mean. The guy I clerked for 14 years ago at the Merc made and LOST fortunes 4 times in an 8 year period. Can these spreads be traded intra day so that scenario I described not happen? Thanks and continued success in your spreads.