Let’s take a look at the following spread CTN8 – CTZ7 (Cotton spread)
The Spread Indicator entered the oversold level a few days ago. The indicator crossed below minus 80 suggesting that the July 2018 cotton contract is stronger than the December 2017 contract. I would consider buying Cotton July 2018 and selling Cotton December 2017, setting my maximum loss limit to $750.00.
The initial margin for this spread is $1,210.00 and the maintenance is $1,100.00
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