Easy Money (or Am I Missing the Obvious)

[TheDude 10]

So, there I am looking round the markets for opportunity/ideas on Friday as ES dried up.....

 

Natural Gas:

 

The Globex spread market is consistently tighter than the spread implied (in) from the outrights. I would have thought the implied in-out mechanism would have made both so tight that opportunity wouldnt be so great.

 

In other words, the June-Sep spread can be purchased at a better price if bought as the June-Sep spread, where as the same spread traded as 2 legs (ie buy the June contract, then sell the Sep contract separately) in the outright market is considerably wider.

 

 

I cant believe this is the easiest arb on the earth, as I know there are people out there with faster computers and brains than I!!!

 

I was watching the scenario pretty much all day and it was constant.

 

Anyone know why this state exists?

[BlueHorseshoe 10]

I cant believe this is the easiest arb on the earth, as I know there are people out there with faster computers and brains than I!!!

 

I was watching the scenario pretty much all day and it was constant.

 

Anyone know why this state exists?

 

I can't help you with an explanation, I'm afraid. What I do know is that if this is the easiest arb on earth, you've just shared it with several thousand other traders . . .

 

Thanks!

 

Bluehorseshoe.

[TheDude 10]

I can't help you with an explanation, I'm afraid. What I do know is that if this is the easiest arb on earth, you've just shared it with several thousand other traders . . .

 

Thanks!

 

Bluehorseshoe.

 

Exactly! But I do know the largest energy traders on the earth (vitoil, totsa, bp, etc) have rooms full of guys doing this exact type of trade day in day out - and we havent even mentioned hedge funds and prop firms like getco, citadel etc so how come this trade still exists???

 

Look at the attachment.

Pay attention to the outrights June and August, then look at the spread market of NGM2-NGQ2 and see where you can make easy money!