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In finance, a spread trade (also known as a relative value trade) is the simultaneous purchase of one security and sale of a related security, called legs, as a unit.Spread trades are usually executed with options or futures contracts as the legs, but other securities are sometimes used.
A critical point for this type of trading to work is the quality of the seasonal pattern and whether the trader can advantage of the pattern. Economists say that according to the efficient-market hypothesis such effects may exists but that these anomalies should be already incorporated in the price.
In finance, a calendar spread (also called a time spread or horizontal spread) is a spread trade involving the simultaneous purchase of futures or options expiring on a particular date and the sale of the same instrument expiring on another date. These individual purchases, known as the legs of the spread, vary only in expiration date; they are ...
In finance, a spread option is a type of option where the payoff is based on the difference in price between two underlying assets. For example, the two assets could be crude oil and heating oil; trading such an option might be of interest to oil refineries, whose profits are a function of the difference between these two prices.
In finance, a credit spread, or net credit spread is an options strategy that involves a purchase of one option and a sale of another option in the same class and expiration but different strike prices. It is designed to make a profit when the spreads between the two options narrows.
In options trading, a box spread is a combination of positions that has a certain (i.e., riskless) payoff, considered to be simply "delta neutral interest rate position".
In finance, an Intermarket Spread is collateral sale of a futures contract on one exchange and the simultaneous purchase of another futures contract on another exchange within any given month. As with any other spread trade , an intermarket spread attempts to profit from the widening or narrowing of the gap between the two contract prices.
Bid–offer spread, between the buying and selling price of a commodity and/or security; Credit spread (bond), on bonds; Option-adjusted spread, on mortgage backed securities where the borrower has the right to repay in full; Options spread, building blocks of option trading strategies. Spread trade, between two related securities or commodities