Updated on May 21, 2024Table of Contents
A futures strip is a type of derivative security that represents a series of consecutive futures contracts traded on the same underlying asset. It is a group of sequentially numbered futures contracts traded on the same commodity or financial instrument, covering a specific range of delivery dates.
What is strip futures?
Strip futures refer to the simultaneous purchase or sale of multiple futures contracts that expire in successive months. This strategy allows traders to lock in prices for a series of months, often used for commodities or energy products.
What is futures strip pricing?
Futures strip pricing is the average price of futures contracts over a series of months. It is commonly used in the energy market to represent the cost of a commodity, such as oil or natural gas, over a specific time frame, typically for a series of consecutive months.
What is a 12-month strip?
A 12-month strip is a futures trading strategy where contracts for 12 consecutive months are bought or sold as a single package. It allows traders to hedge or speculate over a longer period, smoothing out price fluctuations.
What is the meaning of strip price?
The strip price refers to the average price of a series of futures contracts for consecutive months. This price can help investors or companies plan for future costs or revenues over a defined period.
What is strip trading?
Strip trading is the buying or selling of multiple futures contracts, often in a specific sequence over several months. It allows traders to take positions over a longer time horizon, minimizing the risks of short-term market volatility.
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