What is the spread of commodity product?

The

commodity product range includes the purchase of a given commodity and the subsequent sale of products derived from commodities of the same type. In general, these two transactions are held simultaneously. However, if there is a relatively small amount of time between both transactions, the strategy is still considered to be the dissemination of a commodity product. This means that the purchase of commodities can take place after selling products made with the same type of commodity. In both cases, there is no more than thirty -day window between two transactions that make up the span.

Within the wide classification of the commodity product range, a number of specialized spans. One common transaction of this nature is known as the spread of cracks. In principle, the span of cracks is the spread of a commodity product that has to do with commodities such as oil. An example of the crack span would be to buy oil associated with the sale of products such as heating oil or gasoline.

Another type of commodity product span is the crush range. CrushedIt is usually related to foods such as corn or soybeans. Like all versions of the commodity product range, the investor may decide to buy soy futures and then sell any futures associated with soy oil, meat substitutes made with soybeans or dairy products such as soy milk.

The purpose of the commodity product range is to allow the investor to ride the commodity market that is currently experiencing an increase. The purchased component will often be obtained at a good price, and the component sold gains a return that covers the costs of the commodity futures. By monitoring the market and constant reversal of investment inside tresses with commodities, it is possible to get a significant return using this strategy. In general, the application of the commodity product range is expected to bring low risk compared to other investments.