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Definition of 'Futures Spread'
An arbitrage technique in which a trader buys one commodity and sells another contract of the same commodity to capitalize on a discrepancy in prices.
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Investopedia explains 'Futures Spread'
In a futures spread, the goal is to profit from the change in the price difference between two futures contracts while hedging against risk. However, future spreads occur infrequently and when they can be identified, the opportunity for arbitrage is quickly removed though a shift of supply and demand conditions.
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Profiting from arbitrage is not only for market makers--retail traders can find opportunity in risk arbitrage.
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Learn about this low-risk, bearish options strategy used to speculate on major market declines.
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This trading strategy is an excellent limited-risk strategy that can be used with equity as well as commodity and futures options.
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