Putting it together…..

Posted: February 7, 2010 in Argiculture, Energies, Eurodollars, Strategies

Up to now we covered some different strategies, packs and butterflies.  There are many more but how do they come up with this stuff anyway? Mathematicians are funny people aren’t they?  Check this out and see if it strikes a memory for high school mathematics:

Now check out what we can do with this!

Row 1: 1 for a single outright.

Row 2: 1 by -1 for a spread.  Example: Long H0M0 spread, that is Long 1 H0 and Short 1 M0.

Row 3: 1 by -2 by 1 for a butterfly.  Example: Long H0M0U0, that is Long 1 Ho, Short 2 M0, and Long 1 U0.

Row 4: 1 by -3 by +3 by -1 for a double butterfly.  Example Long H0MoU0Z0, that is Long 1 H0, Short 3 M0, Long 3 U0, and Long 1 Z0.

So on and so fourth but the general trend (will vary in agricultures and other term structures with crop cycles) will increase the stability as you work down the triangle to create more geometric positions.  Remember to alternate your signs (Long, Short) or you could end up with a net long position.

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Comments
  1. chrisyang says:

    brief and concise, good staff for beginner.

  2. chrisyang says:

    good explanation, well done.

  3. matt kaufman says:

    amazing, awesome.
    we should talk….

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