Spread Trading - Strategy & Calculation

[anilbishnoi09]

bull and bear affects the spread trading. it is like if you have made bull spread and markets are going down the spread gap is your loss. Because for bull spread you have long position of in the money option and you have short position of out of the money so the net debit of premium is the loss if markets are going your opposite side.

 

[VBS2010]

bull and bear affects the spread trading. it is like if you have made bull spread and markets are going down the spread gap is your loss. Because for bull spread you have long position of in the money option and you have short position of out of the money so the net debit of premium is the loss if markets are going your opposite side.

Can u suggest me normal spread range in Gold & Silver?

 

[sumeetsj]

I think spread range cannot be and should not be normalized.
Just that you have to do enough back-testing and find out till what maximum point the spread gap has reached. And after reaching a certain point what happened next.
The point i want to make here is if you enter a position with a certain spread gap and then the spread gap remains like that only then the trader will start getting restless.
If the spread gap will reduce the trader will make profits.
But if it starts increasing then stop loss would come into picture.

 

[sumeetsj]

In my opinion, unfortunately spreads that can be taken in Gold and Silver are only calendar spreads.
The parity in Gold and Silver(unlike Lead-Zinc) is tough as -

1. Different asset class, (even though both are precious metals, Silver has got more industrial consumption/use than Gold)
2. Different margins
3. Different lot sizes

Also both metals generally move in tandem(apart from some exceptions).
Hence we have to take a calendar spread only when it comes to Gold and Silver.

 

[1sandeepgupta]

Dear sir,

Does bull, bear or sideways movement of the market affect the spread trading or it is just the spread gap.

Thanks,
Sandeep.

 

[VBS2010]

Thanks Sumeetji,

I agree with u & ofcouse prefer to calender spread,
Is silver favorable in Calender spread than gold?

Rgs
VBS2010

 

[MOka]

can somebody please advice
- Brokers who offer Such Spread and cross margin not make it look like naked
- Offer it online
- Any software to spot such opportunities

- What is the max risk

Also are NRIs allowed to trade in Indian F&O

 

[sumeetsj]

Thanks Sumeetji,

I agree with u & ofcouse prefer to calender spread,
Is silver favorable in Calender spread than gold?

Rgs
VBS2010

One of our forum friend Mehataka is doing the research on the Calendar spread on Gold and Silver. He said he will be posting soon.
Lets wait for him to post his findings.

 

[sumeetsj]

can somebody please advice
- Brokers who offer Such Spread and cross margin not make it look like naked
- Offer it online
- Any software to spot such opportunities

- What is the max risk

Also are NRIs allowed to trade in Indian F&O

Many brokers offer such spreads and cross margining.
Online is possible.
TickerPlant a software by FT has features which can spot such opportunities.

 

[sumeetsj]

One of our forum friend Mehataka is doing the research on the Calendar spread on Gold and Silver. He said he will be posting soon.
Lets wait for him to post his findings.

As posted by our friend Mehataka

http://www.traderji.com/commodities/48665-calender-spreads-gold-silver-2.html#post525415