The second distortion of trade spread is the following: "You have to pay double commissions when trading spreads." Yes! You have to pay two fees for each extension you enter in the market. So what? You are negotiating two contracts instead of one. You pay two commissions, as they are negotiating two separate contracts, one in one place and the other in a totally different place. The payment of two commissions of two separate operations is not unfair. Goop will undoubtedly add to your understanding. Let me tell you what is wrong-the payment of a commission of around one option expires worthless. Why do not we hear about that? You pay half back, and receive only half a lap.
It does not make much sense, right? ADVANTAGES OF THE propagation "N TRADE There are many advantages to trading reduced margin spreads hope not run out of space here before I can tell them all. Let's start with the return at the margin, ie the performance. Performance: As I write this, the scope for trade in an open position in soybean futures is $ 1,050, while an expansion of trade in soybeans requires only $ 250, only 23% at most. If soybean futures moved a full point, that move is worth $ 50. If the spread of soybeans a full point moves, that move is worth $ 50. This means that a 5 point favorable move in the soybean futures or a 5 point favorable move in the spread of soybean operator earns $ 250. However, the difference in the performance margin is extraordinary: In the future the return is $ 250 / $ 1,050 = 23.8%.