Crude Oil (CL Large Contract) Spread Trading

Futures Spreads is by far the best and most efficient way to trade the energy markets, bar none. And you can play over a dozen of different strategies.

Quote from riskaddict:

The liquidity of CL options is pretty crappy. I have used spreads and found them tough to unwind efficiently. Spread trading seems like it would have been great 5 weeks ago as vol was declining but I doubt vol will continue to stay as low as it has. I'm no expert when but the sensitivity to theta and imp volatility seems much greater compared to the ES. To me spread trading the CL doesn't seem like it's worth the risk, so many factors have to have to work in your favor it seems like it's just easier to trade what you see. It is great to learn many different strategies but sometimes I think it's a marketing scam by brokers to generate higher commissions by enticing us to learning elaborate option strategies. For me buy, sell and stop is hard enough :confused:
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lol sorry guess I should learn to read. When I hear spread i think options. When creating these "outright" spreads do you ever use CL and the QM at the same time to manage your delta depending on what you will happen short term? For instance right now I'm short 3 FEB QM's but will scalp the current month CL to the upside depending on the PA.
 
Quote from rubibond007:

Futures Spreads is by far the best and most efficient way to trade the energy markets, bar none. And you can play over a dozen of different strategies.
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agree 100%...thanks!
 
Quote from riskaddict:

lol sorry guess I should learn to read. When I hear spread i think options. When creating these "outright" spreads do you ever use CL and the QM at the same time to manage your delta depending on what you will happen short term? For instance right now I'm short 3 FEB QM's but will scalp the current month CL to the upside depending on the PA.
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no...have never done this...also, FYI, when talking Crude Oil futures spreads...talking about trading an actual spread contract and not making your own "spread" by trading long/short 2 various CL contracts...I.E. Buy CL Jan10 and Short CL Feb 10
 
Hi all,

Sorry to wade in! I'd agree spreads are a profitable way to trade.

But 'Increasenow', on reading this thread I would have to say I am in 'l2tradr' camp.

Demo trading to test how the spreads perform is a great idea.

However, in order to assess how the spread performs, surely you have to have a reason to buy the spread in the first place (be it technical or fundamental), and then see if the spreads work how you expected.

You cannot for example just sell Jan Feb CL for no apparent reason and then see what happens. Surely you have to say... I believe the Jan will fall at a quicker rate than the Feb because of a build in crude stock levels; therefore I will sell the Jan Feb spread.

You then have a basis from which to work.
 
Quote from l2tradr:
-----Can you offer some reasoning for those positions?
----- All your positions seem rather random.
-----It seems to me that you jump from strategy to strategy (YM-ES spreads, ags, etc) but seem a little lost, and you're putting on spreads for the sake of spreading.
-----What will you conclude if the spread makes money? That going long a spread is profitable?
-----Either that or you're just looking for attention :confused:
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For some people, the market is a "business". For others, it's "entertainment". :cool:
 
Quote from Papa Lazarou:

Hi all,

Sorry to wade in! I'd agree spreads are a profitable way to trade.

But 'Increasenow', on reading this thread I would have to say I am in 'l2tradr' camp.

Demo trading to test how the spreads perform is a great idea.

However, in order to assess how the spread performs, surely you have to have a reason to buy the spread in the first place (be it technical or fundamental), and then see if the spreads work how you expected.

You cannot for example just sell Jan Feb CL for no apparent reason and then see what happens. Surely you have to say... I believe the Jan will fall at a quicker rate than the Feb because of a build in crude stock levels; therefore I will sell the Jan Feb spread.

You then have a basis from which to work.
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papa...I agree...was simply seeing how they work...not study and actual reasoning behind trades begin...you trade CL spreads?
 
Quote from increasenow:

papa...I agree...was simply seeing how they work...not study and actual reasoning behind trades begin...you trade CL spreads?
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Hi, I look at CL spreads, Brent and GO spreads - on ICE.
 
Quote from Papa Lazarou:

Hi all,

Sorry to wade in! I'd agree spreads are a profitable way to trade.

But 'Increasenow', on reading this thread I would have to say I am in 'l2tradr' camp.

Demo trading to test how the spreads perform is a great idea.

However, in order to assess how the spread performs, surely you have to have a reason to buy the spread in the first place (be it technical or fundamental), and then see if the spreads work how you expected.

You cannot for example just sell Jan Feb CL for no apparent reason and then see what happens. Surely you have to say... I believe the Jan will fall at a quicker rate than the Feb because of a build in crude stock levels; therefore I will sell the Jan Feb spread.

You then have a basis from which to work.
More...

Couple of question. Just trying to learn the theory here.
1) why would a build in inventories cause Jan to fall at a quicker rate than feb.?
2) What if you thought a build in inventories caused Feb to fall at a quicker rate then January. How would you trade that then?
3) If you thought a shortage in inventories caused Jan to rise faster than Feb you would go long the jan feb spread?
4) What if you thought a shortage in inventories caused Feb to rise faster than Jan. How would you trade it then?
 
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