I do a lot of arbitrage/pairs trading and Ive noticed how the monthly contract price for oil always goes bonkers on the last two days of trade. Especially since the July when it started coming down.
Anyways, just by going from prices supplied in IG index.
The current price for March US Light Crude is $34.48
The current price for April US Light Crude is $42.31
History tells me that the March contract will go up on the last few days of trade to more closely reflect the April price. Chances are, 95% of the entire world is expecting the same thing to happen, including ASF forumers.
So if this is the case, why arn't more people going long on the march contract? And at the same time you can also go short on the April contract.
Is there something I'm missing?
I am assuming this situation arises as some hedge fund has a massive position causing liquidity issues. However a small player like me using a MM platform can make a killing.
Has anyone noticed similar situations for the contracts of other metals/commodities?