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Eastern NE | the latest Farm Journal arrived the other day. Page 22 had an article about "helpful" marketing tips. While I found it to be mostly a set of captain obvious statements, there was something that made me scratch my head. "I like the idea of 26 cent of carry on corn" says Brian Splitt, senior trader at Allendale Inc. "Buy the Dec corn and sell July corn as a spread with trading at minus 26 cents, which means you know you have 26 cents locked in."
so what exactly does locked in mean? In other words, if that spread doesn't tighten, where is my profit? In Dec I will be forced to sell my Dec future, and then either roll to the next month, or let my short July ride naked, or against physical bushels.
can someone please explain how I can "lock" 26 cents which seems to imply free money. at least in this article. | |
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Farm Journal Article "Seize Market Opportunities"
