Short Crude Oil 4-Legged Spread, Long Brent Crude Calendar Spread, and short Copper Calendar Spread

Oil - iStock-1342092330

SpreadEdge Capital specializes in seasonal spread trading across a wide variety of commodity markets. A spread trade is the simultaneous purchase and sale of the same commodity with different delivery dates.  SpreadEdge publishes a weekly Newsletter that provides several seasonal spread trade opportunities every week.

Watch List
The SpreadEdge Newsletter includes a “Watch List” of trades that meet our strict screening criteria.  Included in the Watch List are the markets, commodity symbols, entry and exit dates, win %, average profit, average drawdown, best profit, worst loss, and risk level (using a 1-5 scale).  All information is hypothetical and is based on the most recent 15 years of historical data.

This week there are 3 trades on the Watch List that are planned for client and personal accounts.  This video will focus on the short Crude Oil 4-legged spread and the Brent Crude calendar spread.

Technical Action

Brent Crude dropped (6.5%) for the week and is approaching a strong long-term support level.  WTI Crude has a very similar set-up.  I expect an eventual bounce near this level, but trading could continue to drift lower in the short term.

CTA Momentum

The CTA Positioning and Momentum Score is an accurate measure of current momentum and trend-following trader positioning using a (+10 / -10 scale).  Momentum and trend following traders represent a large percentage of trading and can move markets significantly higher or lower. 

Both Brent Crude and WTI Crude have a minimum (10) score indicating that CTAs are fully invested with no “dry powder” to add to existing short positions.

Relative Strength Index
Relative Strength is a momentum oscillator that measures the speed and change of price movements.  RSI has a 0 to 100 scale.

Note also that both markets are in the mid 30’s and approaching the 30 level where markets tend to bounce higher.

Spread Charts
Spread Charts represent the difference between the front and back month contracts and are simply the front month price minus the back month price.  Spreads that are sold profit when the price gets more negative or less positive.  Spreads that are bought profit when prices get more positive or less negative.

To trade this, I am planning 3 trades, 2 that will be completed simultaneously.

  • First, I will take profits from my existing Crude Oil butterfly spread.
  • At the same time, I will open a 4-legged calendar spread. Note that the combination of these 2 trades is further out on the expiration calendar, has much less volatility, and is even more agnostic to market direction.
  • In addition, I will open a Brent Crude calendar spread.

These trades are somewhat “hedged” against each other.  My overall bias moves from bearish to slightly bullish.


For a video of this trade.

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BTW, for more information on spread charts, my website “” has a video entitled “Anatomy of a spread trade".

More Information

The SpreadEdge Weekly Newsletter is published every weekend and provides a broad overview of the important seasonal, technical, and fundamental indicators within the Energy, Grains, Meats, Softs, Metals and Currency markets.  In addition, spread trade recommendations and follow-up on open trades is also provided.  For a free copy of the Weekly Newsletter, please send an email to

Darren Carlat

SpreadEdge Capital, LLC

(214) 636-3133


SpreadEdge Capital, LLC is registered as a Commodity Trading Advisor with the Commodity Futures Trading Commission and is an NFA member. Past performance is not indicative of future results. Futures trading is not suitable for all investors, The risk associated with futures trading is substantial. Only risk capital should be used for these investments because you can lose more than your original investment. This is not a solicitation.

On the date of publication, Darren Carlat did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.