Cattle-hog spreads at unsustainable levels

Pavel Hála | Trading ideas | 30. 3. 2015

The nearest spread between live cattle and lean hogs (LEJ15-HEJ15) was formerly considered wide at levels above 30c. It’s trading above 100c right now and still rising. This situation is unsustainable from the long term perspective. It’s only a matter of time before these markets at least partially converge. The profit potential is great, but…

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Trading grains in the current environment

Pavel Hála | Trading ideas | 2. 2. 2015

Given the current uncertainty in general markets (VIX is above 21 right now), it seems wise to escape into some uncorrelated assets. Grains fit this criterion quite well, given their low correlation with major asset classes like stocks or bonds. I’ll focus on corn and soybeans, because I don’t trade wheat regularly (I have nothing…

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Sugar reversal

Pavel Hála | Trading ideas | 25. 2. 2013

Sugar has been in downtrend for quite a time. I think this is about to change. This is daily OHLC chart from spreadcharts.com: Yep, no sign of turnaround. So why I think it may happen? Because of internal structure of market, i.e. distribution of futures positions between particular market participants. Simply said I’m talking about…

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Soybean oil spread with great profit potential

Pavel Hála | Trading ideas | 21. 2. 2013

Today I have one more volatile (and therefore risky) spread. But despite volatility this trade still has a very good RRR (risk reward ratio). The trade I’m talking about is soybean oil interdelivery spread ZLZ13-ZLN13: Based on the picture above the technical setup is not great but still favorable. Price seems to have found a…

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Crowded hogs spread

Pavel Hála | Trading ideas | 19. 2. 2013

Lean hogs are good for spread trading. So good that many people are watching it. I’ve seen recommendations to enter this trade during past weeks in many newsletters and from people on twitter. The spread I’m talking about is HEM13-HEJ13. So as I said most people who wished to enter this spread are probably already…

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One of my favorite natural gas trades

Pavel Hála | Trading ideas | 18. 2. 2013

Time has come to enter one of my favorite spread trades. It’s in NYMEX natural gas – NGQ13-NGM13. I made money on this spread every single year during last five years. I consider NG to be a great commodity for spread trading. This spread trade is also a very conservative because you can set just…

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Wheat spread trade

Pavel Hála | Trading ideas | 13. 2. 2013

I’m watching one CBOT wheat interdelivery spread. It’s ZWZ13-ZWN13. Seasonality is pushing the spread up: ZWZ11-ZWN11 was an abnormal year and it’s distorting our chart. Luckily in our spreadcharts.com app you can interact with charts and that includes our seasonality analysis. If you click on the ZWZ11-ZWN11 in the legend or the little orange square…

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Quick coffee trade idea

Pavel Hála | Trading ideas | 12. 2. 2013

One quick trade in NYBOT Coffee (KC). Look at spread KCK13-KCH13: Shorting the spread (i.e. long KCH13, short KCK13) would be a good idea right now. Why? Look at seasonality analysis of this spread: It never get much over 3.0 in last ten years so there is probably an arbitrage barrier. And it tends to…

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