60 
BULLETIN 1444, U. S. DEPARTMENT OF AGRICULTURE 
the high market and buy the low. When the normal relationship 
is restored, he buys his contract sold in the high market and sells the 
one bought in the low. Such a transaction is known in the trade 
as a straddle. Likewise, New Orleans may get out of line with New 
York or Liverpool, and be brought back by a similar purchase and 
sale. There are firms which tend to make a specialty of the straddle 
business. 
On account of difference in time, Liverpool opens about five hours 
earlier than New York. If the Liverpool market advances, say 10 
"penny" points, equal to about 20 American points, New York is 
said to be due to open 20 points higher. Liverpool closes about one 
hour after New York opens. For the remainder of the day Liver- 
pool is closed and any change in the New York market is inde- 
pendent of Liverpool. If the market goes down 20 points, Liverpool 
is said to be due down 20 American or 10 Liverpool points. 
This type of parity difference can not be corrected by a straddle, 
without the straddle being short or long, as the case may be, from 
the time one market closes until the other opens. Even then there 
is little chance, for the first sale may be at an advance or a decline 
to more than meet the required change, and the would-be straddler 
may incur a double loss. If the difference persisted until New York 
opened, a straddle would be possible, though ordinarily New York 
would be bought by one party and Liverpool sold by another. 31 
Table 15. 
-Prices of cotton at Neio York and Liverpool at different times of the 
day, illustrating the " straddle parities," September, 192^ 
Date 
Liver- 
pool 
opening 
Liver- 
pool 
just 
previous 
to New 
York 
opening 
New- 
York 
opening 
Liverpool and 
New York at 
11 a. m., 
New York time 
New 
York 
close 
Liver- 
pool 
New 
York 
1924 
Sept. 2 _ _ _ 
Cents 
26.05 
28.06 
28.16 
25.67 
25.82 
24.97 
24.27 
23.95 
24.22 
23.06 
21.95 
22.82 
23.32 
22.73 
23.61 
22.70 
22.84 
23.70 
25. 28 
25.95 
26.63 
Cents 
26.24 
28.12 
28.10 
25.80 
25.89 
24.93 
24.18 
24.25 
24.35 
23.24 
22.32 
22.91 
23.45 
22.92 
23.70 
22.72 
24.66 
23.66 
25.14 
25.98 
27.08 
Cents 
24.61 
24.30 
24.48 
24.40 
24.65 
23.75 
23.50 
22.80 
23.25 
22.30 
21.80 
21.90 
22.40 
22.32 
22.45 
22.16 
23.72 
23.40 
24.75 
25.45 
26.25 
Cents 
26.22 
28.20 
28.20 
25.99 
25.29 
24.86 
23.80 
24.16 
24.30 
22.98 
22.53 
22.96 
23.32 
23.17 
23.53 
23.85 
23.98 
24.45 
25.68 
26. 52 
26.43 
Cents 
24.66 
24.45 
24.48 
24.55 
24.02 
23.58 
23.28 
22.91 
23.13 
22.05 
22.08 
21.85 
22.25 
22.50 
22.45 
23.15 
23.72 
24.10 
24.90 
25.72 
25.61 
Cents 
24.40 
3 _ _ 
24.53 
4 
24.40 
5 
24.44 
8 
23.58 
9 
23.52 
10 
22.78 
11 
23.08 
12. . .. 
22.55 
15__ . __ 
21.83 
16 
21.64 
17 . . 
22.25 
18 
22.25 
19 :_-___ 
22.62 
22 
22.16 
23 
23.87 
24 
23.50 
25 _ 
24.43 
26 
29 
25- 75 
25.80 
30.. _ . . 
25.50 
Prices shown are the quotations as reported by the New York Cotton Exchange and the Liverpool Cotton 
Association for the dates indicated. Conversions of Liverpool prices made at daily rate of exchange as fur- 
nished by the Federal Reserve Board. 
81 For a discussion of straddle parities, see U. S. Dept. Agr. Service and Regulatory 
Announcements No. 9. 
