Commodity Spreads otherwise known Future Spreads are an alternative way to trade the futures market. A basic spread consists of buying one futures contract and selling a different future contract.

There are two basic future spreads an inter-commodity spread which is for example, buying a September Soybean contract and Selling a December Corn contract. Both contracts are in the grain complex and have some form of correlation. inter-commodity spreads typically are more volatile than intra-commodity spreads.

An intra-commodity spread is a spread that consists of buying the same contract but different contract months. An example is to buy November Soybeans and sell September Soybeans. Since they are different months in the same contract these spreads are typically less volatile than inter-commodity spreads.

You would track profit loss on a futures spread based on where you entered the spread and where that spread is currently trading and multiply by the contract value. For example in this futures spread We bought the November Soybeans and sold the September Soybeans for 5 cents to the November side (meaning November is trading 5 cents higher than September). The contract value is $50 per penny. So if the spread closed at 3 cents to the November than the spread is down 2 cents or $100 (2 x $50 =$100).

Please contact George Haralson if you are interested in the current spread recommendations that we have on. 800-656-0443

Featured Commodity Spread

Crude Oil Spread

There is a risk of loss in all trading. Please make sure you understand how spreads work before trading them. Contact George Haralson for information on current and closed recommendations.