futures option spread versus futures spread

September 6th, 2013, 10:47 AM

Hi,

Whats the difference between (calender) between a futures option spread / futures spread .

Is it just the margin requirements calculation ?

Any info greatly appreciated as im trying to put one on.

Thanks

September 6th, 2013, 01:01 PM

The underlying instruments are very different, so your synthetic spread will also behave very differently.
The price of a futures contract is ... its price.
The price of an option has multiple components, according the volatility of the underlying instrument, its expiration date, strike price, ...

September 7th, 2013, 10:08 AM

Please give examples of what you are trying to do and it will be easier to comment.

mattz · September 7th, 2013, 01:25 PM

Calendar spreads typically applied to physical commodities where prices could vary due to supply/demand, storage, cot of carry(warehouse cost), etc
There are only 2 types of trades you can apply: buy the near buy month and sell the deferred month which is a bull spread or do vice versa which is bear spread. The difference between the two is your gain/loss.

Option calendar spreads capitalize on expiration and as mentioned above on volatility of the instrument you are trading. So you really "play" volatility and time as oppose to direction only.

From the nature of your question, and the nature of my answer I am sure you are still scratching your head, but it's ok, we all start somewhere.

If you lack experience in trading, start with directional trading and figuring out if it going up or down before you get into "exotics".

futures option spread versus futures spread

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futures option spread versus futures spread