Ice-cream Speculation

Two ice-cream sellers approaches your home
One sell chocolate for $5 another caramel for $2
The trader inside you scream like a maniac: how can you charge a lot to get a chocolate cone while your competitor priced much reduced?!

Outright

Scenario A
”Let me tell you how to conduct a fair price company --I bet that your price goes down, I am shorting 10 contract of you vicious chocolate guy!”

Scenario B
”Let me tell you how to run a profitable performance --I bet that your price will appear, I am longing 25 contract of you my venerable caramel friend!”


Spreading

”Let me tell you how to conduct a fair price company --I bet that your unjustifiable price goes down, I am shorting 10 contract of you, vicious chocolate man! In the mean time I am longing 10 contract of your competitor!

Market Neutral

I am shorting 10 contract of you while longing 25 contract of your caramel competitor!

Outright Goes South

Scenario A
Wait wait wait, your chocolate cone's price keep rising and there are more suckas prepared to pay for that???

Scenario B
What do you do, grow a pair and bring more demand caramel!!!

Market Neutral Goes South

Scenario A
Dang, chocolate cone price did go down, yet I did not short enough of it to offset the lost I took on caramel decrease at the same time!!!
Scenario B
Dang, caramel cone price did go up, yet I did not long enough of it to offset the lost I took on chocolate move up in the same time!!!
Scenario C
Chocolate keep skyrocketing, caramel keep stirring. . .Oh well, I guess I shouldn't have told them how to conduct their company?


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