Lind Plus Senior Market Strategist Mike Marshall says if you’d like to participate in the energy market but have limited funds, you might consider trading calendar spreads. Here’s more from Mike on an idea for crude oil.
“The March/April Crude spread is currently trading around $2.20 to the April contract after consolidation from above $4.40.I expect the spread to widen again towards the previous highs around $4.The margin on the spread is $608 per contract.This can be a great way to trade the energy markets while maintaining a lower margin; an excellent way for smaller clients to gain exposure to the energies markets. I recommend buying April Crude and selling March Crude at $2.20 or better to the April side.Today’s range was over $1.00, leaving plenty of room to navigate the spread on an intra-day basis as well.Spreads of this sort should be monitored by an experienced professional as the potential risk may be unlimited. It is a play on the widening of the spread between both contracts, and usually this happens when crude oil prices head lower.This spread can also work when future inflationary concerns push back-month prices higher than the front month.We have been witnessing both of these phenomena in recent weeks. “
Mike can be reached at 800-437-4189 or via email at mmarshall@lind-waldock.com for more information on this idea.
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