What are spread orders & its types.

A spread order is a type of trading order used to simultaneously buy and sell related securities in order to capitalize on price differences or minimize risk. It is commonly used in options, futures, and forex markets.

Types of Spread Orders:

• Options Spread Orders
  • Involves buying and selling options of the same underlying asset with different strike prices, expirations, or both.
  • Examples:
    • Vertical Spread (e.g., Buy a call at ₹100, sell a call at ₹110)
    • Calendar Spread (e.g., Buy a near-term option, sell a longer-term option)
• Futures Spread Orders
  • Buying one futures contract and selling another to exploit price differences.
  • Examples:
    • Inter-commodity Spread (e.g., Buy crude oil futures, sell gasoline futures)
    • Intra-commodity Spread (e.g., Buy June wheat futures, sell December wheat futures)
• Forex Spread Orders
  • Simultaneous buying and selling of currency pairs to benefit from exchange rate differences.
• Equity Spread Orders
  • Used in arbitrage strategies, such as pairs trading (going long in one stock and short in another with a correlated price movement).