Seasonal spread traders are spread traders that take advantage of seasonal patterns by holding long and short positions in futures contracts simultaneously in the same or a related commodity markets. The spread is the difference between the simultaneous values of these futures contracts.
Traders may use a combination of fundamental analysis, technical, and historical factors in their analysis. Speculators hope to profit from the relative changes in price between the initial and offsetting positions. Contracts may be spread against different months or different markets. Traders are concerned with whether the changes in the difference between the sides of the spread are moving in their favor or not. Position traders may hold trades longer and with less risk using spreads.
Lower good faith margin deposits required by commodity exchanges to trade spreads means more opportunities to average up and diversify positions. Spreads may behave smoother than the underlying futures contracts.
The concept may apply to Options also, which means that take advantage of cheap and expensive options by holding long and short positions in options simultaneously in the same. The spread is the difference between the simultaneous values of options contracts.
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Spread trader, holding positions in related securities, to trade the difference in price
In finance, a spread trade refers to the act of buying one security or futures contract and selling another related one, in an attempt to profit from the change in the price difference between the two.
Common examples are:
Option spread, between the price of two option contracts at any strike on the same underlying stock or commodity
they learn what is a cheap price to pay for the spread between any two.
any two different strike call or put
Calender spread on futures sell nearby month and buy the next month at same time
