The future spread for KC based on my first 4-month of observation is quite intense. As you can see from my previous graphs you can have in less than 10 days a difference of 4 pts meaning almost 1600 usd of potential loss or gain depending of the direction. Of course things can get worse with futures or naked options what I am mostly doing right now.
One of my point that maybe you missed was about trying to see how similar spreads behaved historically and of course analysing the same period and same spread and from this book of 2004 it was making sense to do: "new crop minus old crop" in the graph. But it is pure convention
Just to show what I mean: KCZ18-KCN18 then KCZ16-KCN16 more or less on the same period are displayed below.
So if I had to make a bet (because at the end it is about that with what a perceived edge), I would say based on the current curve and the two historical selected ones the spread KCZ-KCN 20 could widen a little bit up to July expiration (so I should in this case sell the spread KCN/KCZ20). Or put it differently I would not be comfortable taking the other direction of the sread. So I consider it as a paper trading bet (targeting 2 more points of widening, then getting out on a paper trade)
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