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A really risky (but I think worth the risk) bet is to buy the front and sell the back. You will receive a huge credit, and as long as you close out the back leg
by 0x8BADF00D 6y ago
A really risky (but I think worth the risk) bet is to buy the front and sell the back. You will receive a huge credit, and as long as you close out the back leg below what you sold for, you’re in the clear.
- lordnacho 6y agoThis isn't possible, except for people who can deal with the physical logistics. If you buy the front, you need to put the stuff somewhere for a month. Chances are the people who got stuck selling at negative prices were actually doing just what you describe, they just weren't planning on the spread blowing out from physical issues.
- 0x8BADF00D 6y agoI don’t see supercontango lasting forever. At some point oil demand will rise. Even if it’s a small rise. And you typically should close out combination orders well before expiration.
- cascom 6y agoHow do you not get eaten alive by the negative roll yield (super contango) if you don’t have access to storage?