Commodity Product Spread
There are several aspects and attributes of the commodity product spread. The involvement of a commodity product spread in the purchase of a given tangible or intangible commodity is result of the purchase or subsequent sale of the products because of the commodity product spread.
When is commodity product spread availed?
Usually it so happens that a commodity is purchased and then it is not sold as it is subsequent products involving the specific commodity which was purchased. This subsequent sale and purchase of the commodities and products is based on the commodity product spread. In this way there are two transactions taking place at the same time under the single commodity spread.
Time lapse between two transactions
In the two transactions made by means of the commodity product spread the occurrence time is simultaneous. Even if there is a small amount of time between the two transactions, their executions is not a problem. Even in case of delay, this strategy and sale purchase execution is considered under the provision of the commodity product spread. Normally there is a specifically defined and well managed sequence of sale purchase of the products and commodities. There is no problem in execution of the commodity product spread to be conducted in the reverse direction.
Carrying out the reverse cycle of transactions
Sometimes the purchase of a commodity can be carried out after the sale of products which are usually derived from that commodity. After that the cycle continues. Whether you avail the commodity product spread and avail the transaction of good in forward direction or the reverse direction, the profit is always guaranteed. Even if there is a delay between eh sale and purchase cycle of the commodities and products, it must be noted down that there should not be too much delay in this cycle.
Maximum delay allowed between transactions
In principle, a maximum delay of thirty days is enough and one should not make further delay more than 30 days in case of making sales or purchase of the commodities and products. If any further delay happens, this will hamper the product spread accord. There are many specialized spreads in wake of the commodity product spread system. The most common of these spread policies is the crack spread policy.