By Lawrence G. McMillan
Each fall we recommend a spread: long Gasoline, short Heating Oil. This fall, the spread had its best year ever. The entry date, Friday November 18th, was perfectly timed, as that was the highest the spread traded (see chart, below). We entered at a price of 53, roughly. From there, the spread plunged (in our favor) until it reached 21 (at $840 per point). We lowered the stop to 28 after that, and were stopped out on January 4th. The actual optimum exit date is today, but we were correct in exiting when we did, for the spread expanded to 33 eventually. The total profit was over $22,000 for a 2-lot spread (spread margin was $5,200 for two contracts).
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