spread trade

spread trade
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. Chicago Mercantile Exchange Glossary
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). LIFFE

Financial and business terms. 2012.

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