Dual Edge Research publishes two powerful newsletters that work great individually — and even better together. The Bull Strangle Newsletter focuses on stocks and options, combining stock ownership with premium-selling strategies to generate consistent income and market-beating returns. The Smart Spreads Newsletter specializes in seasonal commodity futures spreads, offering a diversified approach with low correlation to equities. Together, they deliver a complete investment perspective — one focused on income, the other on diversification — all under one simple subscription.
Introduction
Commodity futures offer direct exposure to global supply-and-demand forces, but outright futures positions can be volatile and difficult to manage—especially during weather events, geopolitical shocks, or sudden demand shifts. Commodity spread trading provides an alternative approach. Instead of betting on whether prices rise or fall, spread traders focus on the price relationship between two related futures contracts, often resulting in smoother price behavior and reduced exposure to sharp market swings.
What Is Commodity Spread Trading?
Commodity spread trading involves buying one futures contract while selling another related contract at the same time. The contracts typically involve the same commodity but differ by delivery month (calendar spreads), or they may involve closely related commodities. The goal is not to predict outright direction, but to profit from changes in the price difference between the two contracts.
Why Spreads Tend to Be Less Volatile
Because both legs of a spread are influenced by similar market forces—supply, demand, weather, and macro conditions—large directional moves often affect both contracts simultaneously. This can dampen overall volatility, as gains in one leg may partially offset losses in the other. While spreads are not risk-free, they often experience smaller day-to-day swings than outright futures positions, making them easier to manage for many traders.
The Importance of Seasonality
Many commodity markets exhibit recurring seasonal patterns driven by planting cycles, harvest timing, storage dynamics, and consumption trends. Spread trading is particularly well-suited to capturing these effects. Calendar spreads, in particular, often reflect how supply tightens or loosens over time, allowing traders to analyze historical behavior across many years rather than relying on short-term forecasts.
Margin Efficiency and Structure
Exchanges typically require lower margin for recognized spreads than for outright futures positions, reflecting their historically lower volatility. This margin efficiency can help traders size positions more conservatively and maintain discipline during adverse moves. Lower margin does not eliminate risk, but it can reduce capital stress compared to holding outright futures.
Getting Started with Spreads
Most beginners start with simple calendar spreads in liquid markets such as grains, energy, or soft commodities. These spreads are easier to analyze, more liquid, and better supported by historical data than more complex structures. As with all futures strategies, understanding contract specifications, seasonality, and risk limits is essential.
Final Thoughts
Commodity spread trading offers a structured way to participate in futures markets while potentially reducing volatility and emotional pressure. By focusing on relative price movement instead of outright direction, spreads allow traders to engage with commodities in a more controlled and repeatable manner. For readers interested in deeper, data-driven analysis of historically robust commodity spreads, the Smart Spreads newsletter focuses on seasonality-based spread research, long-term back testing, and disciplined risk management to help traders better understand how spreads behave across market cycles.
More Information
Now you can get two powerful newsletters — for one simple price!
- For stocks and options, the Bull Strangle Newsletter shows you how to combine stock ownership with dual option selling — a disciplined strategy that has consistently outperformed the S&P 500.
- For commodity futures, the Smart Spreads Newsletter focuses on seasonal commodity spreads — a proven, low-correlation approach that thrives in all types of markets.
Each newsletter is designed to deliver consistent income on its own — but when used together, they create a complete, diversified trading approach that works in any market environment.
Visit BullStrangle.com to subscribe for just $1 for the first month.
For a video overview of the Bull Strangle Newsletter
For a video overview of the Smart Spreads Newsletter
Darren Carlat
Dual Edge Research
(214) 636-3133
DualEdgeResearch@gamil.com
Disclaimer
This information is for informational purposes only and should not be considered as investment advice. Past performance is not indicative of future results, and all investments carry inherent risk. Consult with a financial advisor before making any investment decisions.
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