In a van, down by the river. | I would say those distortions are the finger prints of normal market function. Whereas basis is like a gas pedal, spreads are like the steering wheel. Calendar spreads tell you when the market wants it, and are the canary in the coal mine regarding supply and demand. Inter-commodity spreads are simply a reflection of perceived relative value and risk, and are the market's way of telling you what to sell and what to hold.
I think speculation in spreads is huge business, but I don't believe it is any more distorting that flat-price speculation. |
Spreading
