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Futures Spread

1. What is a futures spread?

A futures spread is an arbitrage technique in which a trader takes two positions on a commodity to capitalize on a discrepancy in price. Spreads can be less risky and volatile, which have lower margin requirements when compared to outright futures.

2. What is a calendar spread?

A calendar spread involves buying a futures contract in one month while simultaneously selling the same contract in a different month.

Calendar spreads can be further divided into a bull futures spread, a bear futures spread, and a butterfly spread. Please refer to the market conditions to select the appropriate strategy. 

3. What is a commodity product spread?

A commodity product spread involve buying and selling futures contracts that are related.

Commodity product spreads mainly include:                                                                         

1) Spreads between related commodities, such as buying a gold futures contract while selling a silver futures contract.                                                                           

2) Spreads between raw materials and finished products, such as buying a soybean futures contract whole selling a soybean meal futures.