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To trade or not to trade: An energy spread challenge
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AT-June 2006-3
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Spread relationships can offer unique trade opportunities, but like everything else in the markets, they only work when conditions are favorable.
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Detailed Description
The seasonality of heating oil (HO) and unleaded gasoline (HU) makes these logical markets for spread traders. At this time of year, unleaded gasoline futures spreads might offer more opportunity than heating oil spreads. Accordingly, it seems useful to consider the supplydemand dynamics the gasoline futures market reflect, and see whether a study of the spreads of years past can lead to the discovery of a useful trading plan.
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