intercommodity spread

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Intercommodity spread

In the commodities market, a spread consisting of a long position and a short position in different but related commodities for example, speculating that the price relationship between the two commodities will change, e.g., platinum and gold.

Intercommodity Spread

A spread in which an investor creates an artificial position on a commodity in a certain state. One has an intercommodity spread when one buys a futures contract for a given delivery month and sells a futures contract for a different delivery month on the same commodity but in a different state. For example, an investor can take a long position in crude oil futures for one month and a short position in refined oil futures for another month. This allows the investor to create an artificial position on the price of refining oil. This particular intercommodity spread is called a crack. See also: Crush spread.

intercommodity spread

An investment position in which an investor purchases one commodity and sells short a related but different commodity. An example of an intercommodity spread would be the purchase of a futures contract in silver and the sale of a contract in gold.
References in periodicals archive ?
Furthermore, our market participants can also benefit from the margin offsets provided by DCCC for inter-commodity spreads.
0 release, Neovest now provides access to 104 global multi-asset markets and supports single-click futures trading, futures spreads, inter-commodity spreads, European equity options, and options on futures.
Applications for the new contract include on-the-run yield curve strategies, as well as inter-commodity spreads with CME Group's existing U.
In addition, CME Group will offer pre-defined, implied inter-commodity spreads on CME Globex for 3-Year Treasury Note futures versus other existing Treasury futures contracts.
Margins for inter-commodity spreads for the NYMEX cocoa and coffee futures contracts will be $150 for clearing members, $165 for members, and $203 for customers.
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