I’ve heard people doing spread trades when they think one stock will do better/worse in comparison to another stock or index. I’m looking for details on exactly how this is done.
Is there a particular trading mechanism that would allow for:
Make money if X stock goes down in relation to e.g. S&P 500?
I would also add that I’d like the losses to be limited to the amount of investment (not unlimited) in case X outperforms the market.
Ideally looking for a way to trade where I would make money if X goes down even if the entire market / S&P 500 also goes down, as long as X goes down more (probably in terms of %)
Is this possible? Specifics of mechanics appreciated.