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Re: Advice on selecting contract month to trade



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I follow options on futures and indicies and have found it best to follow
the near month for this purpose. There is of course a whole field of study
in following the correlations of contracts for a given commodity and its
different contract months. This is called trading spreads and can be
applied to correlations among different commodities and indicies as well.
There are many good books on the subject. You can search the web-sites for
booksellers with information on spreads or perhaps the Omega-list experts
would like to suggest a list.

Jim Freeman

----------
> From: Glenn Crumpley <glenn@xxxxxxx>
> To: 'Omega List' <omega-list@xxxxxxxxxx>
> Subject: Advice on selecting contract month to trade
> Date: Monday, April 20, 1998 9:11 PM
> 
> I'm trying to determine a good strategy for selecting which
> contract month/months to trade.
> 
> Until now I assumed that most contracts for a given 
> commodity exhibited similar price characteristics.
> I noticed on my Sugar trade, however, that the May
> and July contracts traded at significantly different
> prices and price movements. Assuming that several
> different months generate similar trading signals, among the approaches
> I've considered are:
> 
> 1.  Pick the nearest month and apply all of my trading capital there.
> 2.  Pick the next nearest month and apply all of my trading capital
there.
> 3.  Spread my capital among several months.
> 
> Any advice?
> 
> Regards,
> Glenn Crumpley