This is a sample entry from Brian Cullen’s email newsletter, The Cullen Outlook, published on November 29, 2013.
I am taking a look at a seasonal spread in HEATING OIL futures.
As we head into January and the cold really begins to set in, heating oil usage (demand) is typically at its greatest. Refineries being prepared are generally operating with full supplies. As demand picks up refineries begin to unload inventories. This can be good for bear spreads at this time of year. Recently we have seen this spread rally to levels that I find attractive so we will enter around this level.
January / March HEATING OIL futures spread trade
SELLING the January contract
BUYING the March contract
Premium of +100 to the SELL side
- Risk will be 100 points to the +200 level …($420.00)
- OBJ will be 200 points to the -100 level …$840.00
Initial margin for this spread is $900.00
Have a look:
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