I've watched financial news off and on for the past several decades. I don't recall ever hearing "strips" until recently; now every talking head opining on fossil fuel mentions "strips." I'm sure the word was used all these years by a select few and maybe I simply missed it ... it's like seeing a new word for the first time and then seeing it everywhere ... maybe that's all it is. Something I missed ...
The "strip" price is nothing more than the "arithmetic" average of all the prices over a specified period of time.
"Arithmetic": add up all the prices and divide by the number of individual data points.
Generally only used with fossil fuel energy; perhaps most often used by Guy Adani over at CNBC. Not to be confused with strip malls or strip clubs.
Generally only used when you want to sound like you know what you are talking about.
This should help:
- how to calculate volatility with spot and strip prices, Motley Fool, May 10, 2017.
- how to calculate annualized volatility, Motley Fool, October 20, 2016.
- roll yield defined, Investopedia, July 9, 2021 (note how recent this article was posted)
i'm seeing it's use in a lot of written articles too...i had an idea from the context what was meant, but i couldn't have written a definition like you have done...
ReplyDeleteThank you. I thought I was the only one who didn't know this stuff. LOL. But it really is something; it seems once someone starts using certain catch phrases or catch words on CNBC, everybody starts using the words.
Deletethankfully, i don't watch CNBC...i once did, though, so i can imagine how they'd use words they didn't even know how a week earlier to pretend to be experts...
DeleteI think I ended up watching CNBC to avoid a) reality shows; b) Dr Oz; c) kneeling athletes; d) nightly news with Brian Williams; and, e) the NBC weatherman.
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