A futures strip is the buying or selling of futures contracts in sequential delivery months traded as a single transaction. This is most common in the energy futures market. Futures strips are typically used to lock in a specific price for a targeted time-frame which can be quite useful from an operations point of view. For example, a futures strip could be bought to lock in a specific price for natural gas futures for a year with 12 monthly contracts connected into a strip. The average price of these 12 contracts is the specific price that traders can transact at, and can be an indicator of the direction of natural gas prices.
Futures Strip Definition
The chart also shows the latest price of the front month contracts and the spread between the two contracts Brent-WTI Spread - light cyan curve. A front month contract also referred to as "the prompt month contract" or simply "the prompt" is a futures contract with an expiration date closest to the current date. It is often, but not always, the most actively traded futures contract. A back-month contract also referred to as "far month contract" is a type of futures contract that expires in any month past the front month futures contract.
New Argus WTI Houston crude oil futures trade
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At Cannon Trading, you'll get information of Crude Oil Futures Prices, Quotes, Charts, contract specification as well as on futures contract, stock futures, energy futures. Learn More Today! Light crude oil futures trading, dates back to the 's.