The purchase of one futures contract and the simultaneous sale of another in order to take advantage of relative price changes. Examples include buying one futures contract and selling another futures contract of the same underlying asset but different delivery month; buying a given delivery month of one futures contract and selling the same delivery month of a different, but related, futures contract (e.g. Short Sterling v. Long Gilt).
Using lower yield securities as collateral in a repo and then reinvesting the cash received to buy higher yield securities which achieves a higher yield while minimizing the extra risk.
a specialized type of trade involving the simultaneous purchase and sale of two different but related futures contracts
A structured transaction wherein a security(ies) is/are placed on loan, simultaneously, the cash received is invested in a short-term investment. Generally both sides, loan and investment, are entered into with the same party. The investment and loan transaction "mirror" each other in terms of reset, pay down and final maturity. See matched Loan.
The simultaneous buying and selling of two related markets in the expectation that a profit will be made when the position is offset. Examples include: buying one futures contract and selling another futures contract of the same commodity but different delivery month; buying and selling the same delivery month of the same commodity on different futures exchanges; buying a given delivery month of one futures market and selling the same delivery month of a different, but related, futures market.
The simultaneous purchase of one contract and the sell of another related contract. Buying gold, selling silver short is an example of a spread trade. The spread betting trader is doing the trade on the assumption that gold will out-perform silver in both a rising and falling market. Spread trading is sometimes called Pairs Trading.
A special type of pit or CME Globex platform trade that allows traders to trade the differential between either:1. The price of a futures or options commodity in different contract months; OR2. The price of two futures or options commodities in the same product groupA spreader is not concerned with the direction in which the market moves, but only with the difference between the prices of each contract.
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.