NSE spread contract

#1
Traders,

I have query regarding NSE predefined future spreads which we can find https://www.nseindia.com/market-data/equity-derivatives-watch select top 20 spread contracts in drop down menu. It looks like

INSTRUMENT
TYPE
SYMBOL EXPIRY DATE BEST BID(Qty) BEST BID(Price) BEST ASK(Price) BEST ASK(Qty) SPREAD LTP TOTAL BUY VOLUME TOTAL SELL VOLUME Stock FuturesMANAPPURAMJUL20AUG2012,000-0.550.0518,0000.60-0.1048,0004,68,000Stock FuturesADANIPORTSJUL20AUG202,5000.050.502,5000.450.6020,0005,40,000Stock FuturesIBULHSGFINJUL20AUG203,100-3.65-3.2512,4000.40-3.6037,2007,99,800Stock FuturesHDFCBANKJUL20AUG203,850-4.60-4.255500.35-4.306,60015,10,850

MY query is which one is sold and which one is bought if I am buying this spread. Selling will be of course opposite.
Also margin required for this kind of spread.
Any tips to trade this spread/

Thanks,
Sabu
 

travi

Well-Known Member
#3
guys can any one answer
I dont think it works in that.
NSE doesn't actually buy / sell those individual contracts in open mkt. Bcos again this would lead to distortion.
( atleast what i think but i could be wrong )

NSE facilitates the spread prices by creating a RT tick of the underlying calendar spread.

Spreads trade in negative to positive range.
When both Contracts trade at the same price it will be 0.

When the near month contract is less than far, spread is +ve diff and -ve for the other way.
So its [Far Fut price] - [Near Fut Price] = spread price

By going long or buying spread, any or both these could happen to be profitable.
1. Far month price increases relative to current difference
2. Near month decreases relative to current difference
3. Or both simultaneously, as in prices of Far goes up and Near goes down.

The opposite movement should happen to be profitable if you sell the spread in the two contracts.
 

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