Texas Eastern Transmission (Tetco) carries 6.2 bcf of Natural gas daily to the NY-NJ area from Texas and Louisiana. The two main liquid, heavily traded supply hubs on Tetco are "Into Algonquin" and "Tetco-m3".
Basis Spread Trading :
Short Strategy (betting on narrowing spread):
short @ Into Algonquin, Tetco-m3
long @ sourcing hubs along the pipeline
trading duration : 20 business days, heating season
Short Basis Spreads with costs included :
Take your pick. A spread at Tetco-m3 is the best followed closely by a couple of spreads at Algonquin.
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