Chapt 8

Question 1

the simultaneous purchasing of one commodity futures contract against the sale of the same or a related futures contract

Answer 1

spread trading

spread is synonymous with “straddle” in futures, but different in options

Question 2

the same commodity on the same exchange with different contract months

Answer 2

intramarket spreads (most common)

Question 3

a spread with the same commodity on different exchanges

Answer 3

intermarket spread

Question 4

different commodities on the same or different exchanges that have related uses

Answer 4

intercommodity spread

Question 5

the purchase of the raw material and the sale of the derived processed products (or vice versa)

Answer 5

commodity product spread

Question 6

difference in price between the related contracts or, if it’s the same commodity contract, the difference between the contract months

Answer 6

spread

Question 7

explain the layout of The Crush spread

Answer 7

Buy soybean
Sell soybean oil
Sell soybean meal

Question 8

explain the layout of The Reverse Crush spread

Answer 8

Sell 50 July soybeans
Buy 9 July soybean oil
Buy 12 July soybean meal

Question 9

explain the layout of The Crush spread

Answer 9

Buy Crude oil
Sell heating oil and gasoline

Question 10

explain the layout of The Reverse Crush spread

Answer 10

Buy heating oil and gasoline
Sell Crude oil

Question 11

there is an inverse relationship between price and