Crack spread is a term used in the oil industry and futures trading for the differential between the price of crude oil and petroleum products extracted from it - that is, the profit margin that an oil refinery can expect to make by "cracking" crude oil (breaking its long-chain hydrocarbons into useful shorter-chain petroleum products).
In the futures markets, the "crack spread" is a specific spread trade involving simultaneously buying and selling contracts in crude oil and one or more derivative products, typically gasoline and heating oil. Oil refineries may trade a crack spread to hedge the price risk of their operations, while speculators attempt to profit from a change in the oil/gasoline price differential.
Read more about Crack Spread: Factors Affecting The Crack Spread, Futures Trading
Famous quotes containing the words crack and/or spread:
““The glacier knocks in the cupboard,
The desert sighs in the bed,
And the crack in the tea-cup opens
A lane to the land of the dead.”
—W.H. (Wystan Hugh)
“The car as we know it is on the way out. To a large extent, I deplore its passing, for as a basically old- fashioned machine, it enshrines a basically old-fashioned idea: freedom. In terms of pollution, noise and human life, the price of that freedom may be high, but perhaps the car, by the very muddle and confusion it causes, may be holding back the remorseless spread of the regimented, electronic society.”
—J.G. (James Graham)