Question

tFormat Arrange View Share Window Help Energy Trading Homework Assignment 2(3) (5) Text Energy Trading Homework Assignment 2 1). List the trading months and their associated trading symbols. 2). Define backwardation 3). Define contango 4). What is mean reversion and how is in important to the shape of a contract matket's forward curve? 5). What does it mean to be long a butterfly; what does it mean to be short a butterfly? 6). What does it mean to be long a condor; what does it mean to be short a condor? 7). What does the term cost-of-carry mean? 8). March Heating Oil futures (HOH) İS trading $1.6500 per gallon and April Heating Oil futures (HOJ) is trading $1.6525 per gallon. Cost of carrying HO is S 0175 per gallon per month. If you buy HOH and sell HOJ at these price differentials, what is the max loss of this trade? What is the maximum profit of this trade? 9). What is the relationship, from a velocity of market price change, between the front of a market and subsequent time periods. Why? 169 o 29

Answer 1

Question 1: The trading Months and the associated symbols are as shown below:

Symbol	Month
F	January
G	February
H	March
J	April
K	May
M	June
N	July
Q	August
U	September
V	October
X	November
Z	December
Y	Cash

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