Spreads

Commodity Spreads are the purchase of one futures contract and the sale of a different futures contract in the hope of profiting from a widening or narrowing ( spread ) of the price difference. Because gains and losses occur as the result of the difference in price changes, rather than as a result of the change in the overall level of commodity prices, spreads are often considered more conservative and less risky than having an outright long or short futures position. In general, this may be the case. It should be recognized, though, that the loss from a spread could be as great as, or even greater than, that which might be incurred in having an outright futures position. An adverse widening or narrowing of the spread during a particular time period may exceed the change in the overall level of futures prices, and it is possible to experience losses on both sides of the commodity contracts involved, that is, on both legs of the spread.

Past performance is not necessarily indicative of future results. The risk of loss exists in commodity and options trading.

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Information is believed to be reliable and is provided 'as is' without warranty.