Today's Date 03/29/2023 18:26 PM
We quote spreads 1 of 2 ways. Either way the spread trader always wants the spread
quote to increase. If the spread is negative the trader first wants the spread to
go to zero then to positive numbers.
FIRST WAY: This is the easier of the 2 ways we quote spreads. If the
Contract Size (Unit Move) is the same for the long and short contracts we
simply subtract the short price from the long price.
SECOND WAY: This way involves one more step. If the Contract Size
(Unit Move) is NOT the same for the long and short contracts then we quote
the spread as the difference between the dollar values of the 2 contracts. In other
words, the contract size (Unit Move) times the current price of the short is subtracted
from the contract size (Unit Move) times the current price of the long.
Recommend Reading - Futures Spread Trading
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