Add training workflow, datasets, and runbook

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446A COMpLete guide tO tHe Futures MArKet
■ The Limited-Risk Spread
the limited-risk spread is a type of intracommodity spread involving the buying of a near month
(relatively speaking) and the selling of a more distant month in a storable commodity in which the
process of taking delivery, storing, and redelivering at a later date does not require reinspection or
involve major transportation or storage complications. this defi nition would exclude such commodi-
ties as live cattle, which by defi nition are nonstorable, and sugar, which involves major complications
in taking delivery and storing. Commodities that fall into the limited-risk category include corn,
wheat, oats, soybeans, soybean oil, copper, cotton, orange juice, cocoa, and lumber.
2
in a commodity fulfi lling the above specifi cations, the maximum premium that a more distant
month can command over a nearby contract is roughly equal to the cost of taking delivery, holding
the commodity for the length of time between the two expirations, and then redelivering. the cost
for this entire operation is referred to as full carry. the term limited risk will be used only when the
nearby month is at a discount. For example, assuming full carry in the October/december cotton
FIGURE  30.1 July and december 2015 Coff ee Futures vs. July/december 2015 Coff ee spread
Chart created using tradestation. ©tradestation t echnologies, inc. All rights reserved.
2 Although precious metals can easily be received in delivery, stored, and redelivered, they are not listed here
because spreads in precious metals are almost entirely determined by carrying charges. thus, the only motivation
for implementing an intramarket precious metals spread is an expectation for a change in carrying charges. in
contrast, the purpose of a limited-risk spread is to profi t from an expected narrowing of the spread relative to
the level implied by carrying charges (which are assumed to remain constant).