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I did not trade seasonal intra-commodity spreads in CL, NG, or HO recently. One other spread, I traded, was the RB-CL. It also follows the seasonal spread nicely since the end of 2020. The data related to profit / loss are similar to the RB-HO, but RB-HO looks better to me.
I took a look at this but thought the current entry price rather on the high side, so decided to hold on to see which way it'll go. Perhaps too cautious :-)
What is your view on CL : Long Dec- Short Jul spread?
Thanks
There is a trade suggestion of MRCI that I like: LCM-LHM from end of April until early June.
The spread only follows the seasonal chart for some weeks. But the spread is overextended to the short side - it has not been that low since early 2014. LCM changed direction with an outside day up today, and LHM is extremely overbought.
The spread worked in 13 of the most recent 15 years.
I entered this trade using short option spreads: LCQ P118-108, LHQ C110-120. This gives me the maximum profit as long as the short legs are OTM at expiry. I used the August contracts to enter at approx. 100 DTE.
Is this a fixed $ stop exit ? When do you decide to exit a trade with a small loss ? I think the idea of these trades is to allow a range of drawdown until it hits target, or you treat it as any other type of trading with a fixed dollar stop ?
I decide about the stop when I enter a trade. In this case I chose a narrow stop, because the spread already had moved far, and I considered the profit potential to be limited. Risk and profit potential should be in a good relation to each other. I always keep risk significantly smaller than profit potential.