Does anyone trade to profit from contango?

  • Thread starter Thread starter krugman25
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krugman25

I am wondering, does anyone here trade to profit from contango? If so, how do you structure a trade to profit from contango. I know SVXY was an ETF that seemed to benefit well from contango (until it got blown to smithereens). Doesn't have to be VIX, could be FX, commodities or otherwise.
 
cdcaveman said:
your talking a bout the shape of a futures curve, mostly its priced very efficiently
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Yes, the futures forward curve. I am not sure what you mean by "its priced very efficiently". I'm not talking about arbitraging some inefficiency in the curve, I am talking about profiting from the effects of contango.
 
My guess is the only way to profit from contango is to hold the physical product and then sell futures. Am I wrong in that?

Edit:
Or naked shorting?
 
Not to be contrary, but the folks who benefit are never going to put their "secret sauce" for trading vol on a public forum. It's the same as trading oil where the cash/spot requires huge size and access to structured markets is a plus. Not retail
 
ajacobson said:
Not to be contrary, but the folks who benefit are never going to put their "secret sauce" for trading vol on a public forum. It's the same as trading oil where the cash/spot requires huge size and access to structured markets is a plus. Not retail
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I am not asking for secret sauce, just wondering if there is a strategy that exists for trading contango.
 
I'm going to answer yes and then you are going to ask how it's done. The answer is yes and that's as far as I'm willing to go.
Ask your self this - who/what creates contango and who does it benefit?
 
krugman25 said:
I am not asking for secret sauce, just wondering if there is a strategy that exists for trading contango.
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I am not asking fro sceret sauce, just whether there is a strategy?

YES THERE IS

What is it?

I THOUGHT YOU WERE NOT ASKING FOR SECRET SAUCE, JUST YES OR NO?

I have to know your secret sauce

THEN YOU ARE LYING!
 
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Then Gatheral's book. This first.
 
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