In what market and how the price difference changes, the cow price difference can be profitable.

Bull spread refers to an arbitrage method of buying the latest delivery month contract and selling the forward delivery month contract at the same time, also known as forward arbitrage. Bear market arbitrage refers to an arbitrage method of selling recent delivery monthly contracts and buying forward delivery monthly contracts, also known as reverse arbitrage.

Cattle scattered, in fact, there is a problem with the definition. If you really know it's a bull market, just buy more.

It may be better to understand it as "spot shortage". At this time, the water price in recent months is generally higher than that in distant months, so you can buy near and throw away to make a profit.

Niusan can be subdivided.

(1) Bull market spread in the forward market.

A. risk-free arbitrage.

When the absolute value of the spread is greater than the cost of the position, the risk-free arbitrage opportunity appears in the forward market. At this time, you can make long contracts in recent months and establish short contracts in the same position in distant months. If the spread converges, we can hedge our positions in the futures market. If we still don't return it in the delivery month, we can receive the warehouse receipt in the near month and close the position with the warehouse receipt when it expires in the far month, and we can get risk-free income.

Risk-free arbitrage needs to pay attention to two points, one is the cancellation factor of warehouse receipts, and the other is the value-added tax risk, which will be specifically arbitrage later, so I won't go into details here.

B. hedging logic arbitrage.

In the forward market, if the supply is insufficient and the demand is strong, the contract price in recent months will increase more than that in the forward market, or the contract price in recent months will decrease less than that in the forward market, so that short contract arbitrage can be carried out and the same position can be established in recent months. There are two situations:

1. The premium paid by the recent contract to the forward contract depends on the recent market demand for goods and the shortage of supply, and is not subject to other restrictions, so the profit potential is huge. For example, in last year's cotton market, this can be done between CF11KLOC-0/and the forward CF 1 105 contract. As long as the cotton supply and demand situation does not improve, this situation will continue, and traders who intervene in reverse arbitrage prematurely should suffer heavy losses. The extreme situation is that there are many short positions. Both natural rubber and soybeans in the 809 contract appeared. At that time, investors who simply relied on historical spreads and did not know how to analyze the internal logical relationship between price contracts and market supply and demand did not stop losses in time and suffered heavy losses.

2. Market supply and demand have improved, reflecting the premium of forward contracts over recent contracts. Investors should either stop their losses in time or move their positions while insisting on the spread judgment. There may be a good opportunity for reverse arbitrage at this time.

(2) The bull market spread in the reverse market.

The bull market spread in the case of reverse market is also operated in practice, but this operation should be regarded as speculation rather than arbitrage. The most classic is the soybean meal contract of Dalian Commodity Exchange. I won't go into details here.