What is spreading crushing?
The crush range is strategies that use the dual transaction model associated with a particular commodity to maximize the opportunity to create a favorable position. Generally, the crush span structure will include the purchase of futures position and at the same time ensures the sale of products that can be produced using these commodities. The aim is to create an artificial interest, which in turn helps to increase the value of the futures purchased and provide a greater return on investment.
One of the best examples of how spreading can work is illustrated by using a futures soy strategy. As the first step in the process, the investor will buy these future in the long -term investment strategy. At the same time, it will be involved in the sale of futures options that have to do with products that can be made from soybeans. For example, an investor would sell futures that had to make with soy oil or vegetarian food products made of soybeans. Futures soy food is another possible typeM Futures, which the investor would place on the open market for sale as part of creating a Crush range.
What this combination of soy futures when selling futures, which includes specific types of products made of soybeans, is that it can create a range of raw products and finished products. Because this process can stimulate interest in finished products and their related futures capabilities, the value of futures to the raw product is likely to increase. Thus, the investor can help correct, which can be considered a difference between the prices of different futures options and still generate further revenues at the same time.
It is important to realize that investors do not necessarily try to create a crush of spread randomly. Relative prices of futures themselves are often a factor in determining whether a certain level of incorrect amount is currently present on the market. If the incorrect amount of the incorrect amount ofVarious futures either raw products or finished products, the implementation of the crush range is often considered to be a price situation and at the same time stimulates interest and business activities, which eventually benefits all participants.