Beyond Carry: Why Direction Matters in Commodity Spread Trading

Carry helps identify opportunity—but it doesn't tell you which side of the trade has the historical edge. Using a database of more than 31,000 commodity spread trades, this article introduces the first of three behavioral characteristics used to evaluate spread opportunities: Direction. Real-world examples from Heating Oil, Soybeans, and Lean Hogs demonstrate why buying and selling are often not equally attractive.Offshore oil platform in ocean by Wirestock via iStock