Chapter 8 Crunch time Flashcards
spreads
a spread with the same commodity exchange but different months
intramarket or InterDelivery spread
a spread with the same commodity and month but on different exchanges
intermarket spread
spread that have different commodities
intercommodity spread
Regarding commodity product spreads, investors take one position in the raw material and the other in…
the position of the by-product.
Crush spread:
Buy soybeans
Sell Soybean oil & meal
Crack spread:
Buy crude oil
Sell gasoline & heating oil
A spreader’s market sentiment is generally reflected in…
his/her position in the nearest month.
If a spreader is bullish he will…
go long the near month
If a spreader is bearish he will…
go short the near month
On what conditions is the spreader’s sentiment indicated by his position in the deferred month?
Stock index futures & foreign currency spreads
If a spread trader bought the more expensive leg, he wants the spread to…
WIDEN (BUYER = WIDEN)
If a spread trader sold the more expensive leg, he wants the spread to…
NARROW (NARROW = SELLER)
created by offsetting positions in a 30-year T-bond futures and 10-year T-note futures
Note over Bond (NOB) spread
What would a trader do if long-term interest rates are falling faster than intermediate-term interest rates?
Trader would establish a NOB spread by shorting T-note future and going long T-bond futures
