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| Received 2 new basis contracts today after I allowed them to roll to the July contract last week. One contract was at 11 under may, the spread was 3 and roll charge 3 which puts me now at 17 under July futures, ok no problem with this one its what I expected.
The second contract was just made about a month ago, at which point they would not allow me to make a July basis, said I had to stay in nearby even though I was pretty sure I would have to roll it. So it started as 5 under May, add 3 cents roll charge, but also added 9 cents for spread to put me at 17 under July same as first contract. Is this correct? I am still new to a lot of this but I thought the spread should be based on board prices and thus should be the same for both contracts. If the spreads are based off of the elevators price then I will strongly have to rethink basis contracts being worth anything because if you decide to roll you loose anything you gained from basis depreciation. In other words the basis is only locked in for 2 months at a time... | |
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Rolling basis contracts and spreads?
