intercommodity spread

(redirected from Inter-Commodity Spread)

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 ?
For financial players, we offer inter-commodity spread opportunities through our ingeniously designed spread trading engine.
It has 26 brokers who provide clients with continuous coverage of energy markets around the world including pre-trade intelligence and execution expertise of high volume trades, including blocks, inter-commodity spreads and complex option strategies.
Furthermore, our market participants can also benefit from the margin offsets provided by DCCC for inter-commodity spreads."
Full browser ?