A futures spread is a position in two related contracts. The key question is not whether the whole market rises or falls. It is whether the long leg outperforms the short leg.
What You'll Learn
| Unit | Focus |
|---|---|
| Spread Trading | Execution and widening or narrowing expectations |
| Common Types of Spreads | Carrying-charge, bull, bear, and intermarket spreads |
Chapter Strategy
Compute a spread from both legs or from the change in their price difference. Apply the contract multiplier and number of spreads only after the direction of the net differential is clear.