What happens if LT is within suggested trading days?

Thursday, 15 December 2011 13:15 Melissa Moore
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On the daily charts for each trading strategy are little boxes that say "LT" and, in some cases, "FN."  Of course, they stand for "Last Trading Day" and "First Notice Day", respectively, for contracts of earlier expiry or delivery.  They are meant to illustrate how the market tends to behave (usually temporarily) when those earlier contracts are subject to such otherwise artificial dynamics.  For example, you may notice in such charts for most markets settled by delivery that most of its contracts will tend to decline moderately beforehand because long speculators must liquidate their positions in the soon-to-be-deliverable contract in order to avoid being delivered upon.  Thus, you may notice a seasonal pattern for July Soybeans, for example, portrays a modest decline going into March 1 ---- the first delivery date for March Soybeans --- because bullish speculators are exiting long positions in March Soybeans before they can be delivered upon.  Shortly thereafter, the market may rebound as that "artificial" selling pressure dries up and bullish speculators reinstate their long positions into the May or July contracts.

Thus, look to see if the seasonal pattern has an interim peak or valley right around these dates denoted with "LT" or "FN."  Those peaks or valleys can often provide an opportunity.

Last Updated on Thursday, 15 December 2011 13:15