Simple construction/Destruction of Packs versus Outright Trading

1. PACK EXIT STRATEGY

2. PACK VERSUS OUTRIGHT
 The excel snapshot is how to
hedge a pack (long) with an ED1 ED2 ED3 ED4
outright (4 * short leg2) and how
to hedge to flat the position. you LEG1 LEG2 LEG3 LEG4
can use this method to either exit
from a pack, or you can price the TRADE 1 1 1 1 1
whole package together as a unit.
Either way it’s a bonefied method TRADE 2 -4
to make good money. I will send
each example, as each outright TRADE 3 -1 2 -1
creates different strategies. So if TRADE 4 1 -1
you buy the pack (whatever pack)
and you sell the second outright.
you are flat outright exposure. To
exit the remaining position, you
need to sell 1 unit of the
ed1/ed2/ed3 butterfly (on jbus
and liquid) and buy 1 unit of the
ed2/ed4 6mth calendar (on jbus
and liquid)
NET 0 0 0 0

3. PACK versus Outright
Opposite you have ED1 ED2 ED3 ED4
the pack (long) LEG1 LEG2 LEG3 LEG4
versus 1 st TRADE 1 1 1 1 1
(outright) short. To TRADE 2 -4
TRADE 3 1 -1
exit you buy 1 TRADE 4 1 -1
ed1/ed4, buy 1 TRADE 5 1 -1
ed1/ed3 and buy 1
ed1/ed2. again all
liquid products
quoted on JBUS.
NET 0 0 0 0

4. PACK versus Outright
 Opposite you have ED1 ED2 ED3 ED4
pack (long) versus LEG1 LEG2 LEG3 LEG4
3rd outright (short). TRADE 1 1 1 1 1
To exit you trade TRADE 2 -4
TRADE 3 -1 2 -1
the following. Sell TRADE 4 -1 1
1 ed2/ed3/ed4 TRADE 5
butterfly. And sell
1 ed1/ed3. all
these are liquid.
NET 0 0 0 0

5. PACK versus OUTRIGHT
 Opposite is the ED1 ED2 ED3 ED4
pack (long) versus LEG1 LEG2 LEG3 LEG4
4th Outright (short). TRADE 1 1 1 1 1
To exit this TRADE 2 -4
strategy you TRADE 3 -1 1
simply sell 1 TRADE 4 -1 1
ed1/ed4, sell 1
TRADE 5 -1 1
ed2/ed4 and sell 1
ed3/ed4.
 These are all very
liquid spreads.
NET 0 0 0 0

6. Bundle versus Pack
 As you can see you can hedge a bundle/pack
quite simply through the 12 month calendars. In
the example below you buy 2 yr bundle and sell
2nd pack (red). To exit you simply sell 1 unit of
each the ed1/ed5, ed2/ed6, ed3/ed7 and
ed4/ed8. this is a great way of managing possies.
LEG1 LEG2 LEG3 LEG4 LEG5 LEG6 LEG7 LEG8
ED1 ED2 ED3 ED4 ED5 ED6 ED7 ED8
TRADE 1 1 1 1 1 1 1 1
TRADE -2 -2 -2 -2
TRADE -1 1
TRADE -1 1
TRADE -1 1
TRADE -1 1
0 0 0 0 0 0 0 0

7. conclusion
 Many traders use this method to
scalp packs and bundles all day long.
I think with your speed edge, plus
signal strength you can trade the
inside market of the packs and
bundles, without having to worry
about having to sell the pack you
bought.