{"id":3570,"date":"2018-11-26T15:41:16","date_gmt":"2018-11-26T15:41:16","guid":{"rendered":"https:\/\/www.wasteyourtime.co\/?page_id=3570"},"modified":"2020-07-18T15:48:26","modified_gmt":"2020-07-18T14:48:26","slug":"spread","status":"publish","type":"page","link":"https:\/\/traders-paradise.com\/magazine\/trading-dictionary\/s\/spread\/","title":{"rendered":"Spread"},"content":{"rendered":"<h4><b>DEFINITION of Spread<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">Spread is the difference in price between the buy (offer) and sell (bid) prices quoted for an asset. <\/span><\/p>\n<h4><b>WHAT IT IS IN ESSENCE<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">The purpose of this trade is to net a profit from the difference between the two legs. That is the spread. Futures and options typically form the legs of such trade.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Such trades are executing as a single unit on futures exchanges in order to ensure that the completion of the trade is perfectly synchronized. Also, to eliminate the risk of one leg failing to execute. And to take advantage of the narrowing or widening.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We can recognize three types of this kind of trades: Calendar, intercommodity, an option. Calendar execution is based on the expected market performance of a security at a specific date, versus its performances at another point in time.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Intercommodity reflects the economic relationship between two different but comparable commodities.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">An option spread is formed by buying and selling the same stock at different strike points. The option\u00a0can be complex, with their exotic names adding to the complexity, like the iron butterfly, iron condor, etc.\u00a0<\/span><\/p>\n<h4><b>HOW TO USE<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">Many brokers or market makers will quote their prices in this form. The price to buy an asset in a spread will always be higher than the price to sell it. It is also a strategy in options trading that involves combining multiple options with similar features. This is known as an option spread.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When trading products with spreads, the aim is for the asset to move in value beyond the price of it. That means buy trades can be sold for a profit, or sell trades bought for a profit.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It is one way in which traders pay to make trades. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some trades don&#8217;t have a spread but are charged on a commission basis, and some have a mixture of the two.<\/span><br \/>\nFor more read<a href=\"https:\/\/traders-paradise.com\/magazine\/2018\/10\/what-is-spread-in-trading\"> HERE<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>DEFINITION of Spread Spread is the difference in price between the buy (offer) and sell (bid) prices quoted for an asset. WHAT IT IS IN ESSENCE The purpose of this trade is to net a profit from the difference between the two legs. That is the spread. Futures and options typically form the legs of [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":7222,"parent":3046,"menu_order":5,"comment_status":"closed","ping_status":"closed","template":"","meta":{"content-type":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"class_list":["post-3570","page","type-page","status-publish","has-post-thumbnail","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Spread | Financial Dictionary | Traders Paradise<\/title>\n<meta name=\"description\" content=\"Spread is the difference in price between the buy and sell prices quoted for an asset. 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