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When trading Futures, a calendar spread uses two different expiration periods to create a position in an underlying that is less risky and requires less margin that outright buying and selling of contracts. When establishing calendar spreads, it's important to note whether the underlying is experiencing backwardation (front month contracts are more expensive than back month) or contango (back month contracts are more expensive than front month). From there, you can establish long or short calendar positions depending on whether you assume the spread between the expirations will diverge or converge. On today's Closing the Gap segment, Pete Mulmat joins Tom Sosnoff & Tony Battista to present Calendar Spread strategies that can be used to trade Natural Gas Futures (/NG). tastyrade explains how seasonality plays a role in Natural Gas Futures pricing and possible calendar spreads to add to your portofolio based on the changes of supply and demand in the underlying! |
An Introduction to Calendar Spreads and How They Can be Used to Trade Seasonality in Natural Gas Futures Contracts
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