Trading, hedging, and investment strategies

Question 1

Intra-market spreads: In contango markets:

Answer 1

• Spread narrows
- Trade: Buy the spread
- Actions: Buy near dated and sell far dated
• Spread widens
- Trade: Sell the spread
- Actions: Sell near dated and buy far dated

Question 2

Inter-market spread

Answer 2

Buying and selling futures on different but connected assets
• Profit from a breakdown in correlation
• Transfer exposure on a portfolio