Questions tagged [spreads]

A spread ca refer to one of: * the difference between the bid and the ask price of a security. * an options position established by purchasing one option and selling another option of the same class but of a different series. * The difference between a financial measurement relative to some benchmark (e.g. credit spreads, Z-spreads)

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Spread calls in IRA retirement account and legal rules/regulations (USA)

I have an IRA account (USA) with Fidelity brokerage. I have an ability to do both Calendar and Vertical Spreads options in that particular retirement account. Are there any legal rules and regulations ...
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Explaining different risk/reward ratios of bull put spreads with same strikes but different expirations

I've been looking at call spreads and put spreads and observed some vastly different risk/reward ratios even when the same spread width is used. Can someone please explain these differences? All ...
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How is it possible that these deep ITM stock options on DISH went from 52,000 volume, 550 open bids, 550 open asks to being completely dead overnight?

I bought 16 years of historical hourly stock options data for my personal investment study to test how particular strategies may have played out over a long period of time. I'm looking at the data for ...
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What is causing large bid/ask spread in IEX top of book data?

I have been collecting data and experimenting with back testing algorithmic trading strategies. Admittedly I am not experienced in this domain and have been trying to build my understanding. I just ...
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202 views

What does it mean if the spread is temporarily shown to be 0?

In cryptocurrency/trading what does it mean if the spread is temporarily shown to be 0 (see diagram below)? There were no bids (or asks) on the order book at that time Market data was not available ...
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37 views

Bid ask spread and last price

Let us assume that the bid price is $10 the ask price is $20. We can only buy for $20 and only sell for $10. Does the current price have to be in the middle? IOW, does it have to be $15? Or can it ...
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How do market makers profit from the bid-ask spread when bids are almost always lower than asks?

I am familiar with how currency exchange booths at airports make some of their money: from the bid-ask spread. For example, they will say: "you can sell us 1 USD for 1.32 CAD, and you can buy 1 USD ...
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whats the difference between spread betting and day trading in shares?

please whats the difference between spread betting and day trading in shares? i understand in the UK, spread betting is tax free while day trading in the US markets from the UK will incur tax. For a ...
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what kind of exchange model is used in a typical large Stock Exchange?

So I have recently understood the meaning of a bid-ask spread and how market makers are involved in this process. However if I am not one of the lucky few 'members' of for instance the Amsterdam ...
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Calculating volume-weighted-average spread (VWAS) for an index at a given size

I need to produce the effective spread at size 5K of an index. I am able to get all the securities' individual effective spread, but a simple averaging of all the effective spread of those securities ...
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Sell the long on a debit spread to move it closer to the short?

I’ve been thinking about opening a wide bullish debit spread on SPY with a two month time to expiry. I’m currently looking at the March 20th calls and am thinking of selling the $425 call while ...
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Is a credit larger than the spread width bad in a credit spread?

I’ve been pondering this question since looking a put options for MCD today where I found two options for a credit spread that resulted in a credit $0.01 higher than the width of the spread. I was ...
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68 views

Understanding the visual representation of a Calendar Spread

The following plot and its context were taken from Hull`s Options, Futures and Other Derivative Securities (2002). I am slowly getting the basics of financial mathematics and came across this plot ...
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How to vet the liquidity of a bid/ask spread for swing and position trading of equities

I'm looking to create a liquidity vetting policy when searching for equities to swing or position trade, I won't be Forex trading, day trading, options trading or trading OTC stocks. I'm familiar with ...
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118 views

Clarification on definition of Negative Term Spread

I've been trying to educate myself on some financial terms and I've gotten into a point where I'm a little confused. Reading Understanding Term Spreads or Interest Rate Spreads I guess to understand ...
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Spread betting on UK house prices

There are articles online which discuss spread betting on house prices. However I have been unable to find companies that offer spreads on any of the well known UK house price indices. Given that ...
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Why are vertical option spreads level 3, requiring margin?

Why are vertical spreads (e.g., buying a call at one strike and selling a call at another strike, at the same expiration date) classified as "Level 3" options strategies, therefore requiring margin? ...
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87 views

Naked Put at Expiration

For most brokers, how naked put works at the expiration? Buy the option at that price, if ITM. Buy the underlying stocks if having enough cash in the account. For 2, does it depend on if the option ...
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Spreads on taker-maker exchange

Intuitively, I feel that, for a given stock traded on 2 exchanges with different price structure (i.e., exchange A is maker-taker, exchange B is taker-maker), the spread should be wider on exchange B (...
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Forex ask vs bid spread

There's something I don't understand about the bid vs ask price spread on fx markets: For example, assume the lowest ask price is 200, and the highest bid price is 100. So if I want to buy now I need ...
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What exactly happens during Forex transaction?

We are talking about Forex market. I want to figure out what exactly happens when I process a transaction on this market. Can you please correct me if I'm wrong: Assume we are working on EURUSD pair ...
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392 views

Why doesn't the bid/ask reflect my ask price on a spread options position I am trying to get rid of?

I entered this trade in about a week ago. It's always been under the ask but the ask never reflects my ask. Why?
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157 views

How should I interpret information about bond spreads that narrowed or widened the most?

How should I interpret information about bond spreads that narrowed or widened the most? I see this information in the financial pages in the newspaper, and have some ideas about what it means, but ...
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Calculate Plus 500 Spread payment

PLEASE ANSWER IF YOU ARE USING PLUS500 as platform so that it is easier to check at platform level. Please ask for more details in case you need before downvoting I am scratching my head around the ...
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Buy on bid sell on ask

Assuming that on some equities buy/sell price spread become more than x% in order books, which let's assume is more than exchange fees, does it make sense to to buy/sell and earn money on spread? Does ...
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How to determine if a bid-ask spread is “good” or “bad”?

Is it possible to weight the bid-ask spread? I'll explain ... In the moment, for a share X, to trade I use the price, volume, $ volume, # trades, % chg and the bid-ask spread (BAS). To make day ...
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914 views

Negative Bid-ask spread in an OTC market

I have a question about bid-ask spread in an over-the-counter market. I have these data: i Spread Midpoint Imbalance Ask Bid Total Ask Total bid 7 -1.378094 -0....
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611 views

Why divide by ask rate to get the spread?

I want to know why when we calculate the spread equation, that is the difference between ask rate and bid rate divided by ask rate, why can't we divide by bid rate?
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Backtesting daytrading strategy, how to handle the spread?

I am currently developing a daytrading application which based on rules and algorithms buys or sells stocks, which right now might buy/sell a stock in the magnitude of 100 per day. I am trying to ...
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295 views

Which spot Treasury bond is used to calculate this high-yield spread?

The link below shows the BofA Merrill Lynch US High Yield Option-Adjusted Spread. I am trying to have a better understanding of high-yield bonds before I invest in them. https://fred.stlouisfed.org/...
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871 views

How does a limit order work for a credit spread?

In the stock market, a limit order goes in the order book saying Someone is willing to buy 5 shares of this stock at $5. I understand the same would be true for an options order at a particular ...
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1k views

What do stock market index future bid/ask quotes mean?

I see bid and ask quotes for stock market index futures (e.g. the S&P500 mini future contract). However, I've just read from multiple sources that there is no cost to enter into a futures contract....
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What happens when the short leg of a credit put spread is assigned, but there is not enough liquidity to close the long leg?

My guess is that, if there is time left in the options the broker will wait, but if not, then the long put will expire worthless, and the trader will simply end up long the shares. If that's the case, ...
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What happens when a calendar spread is assigned in a non-margin account?

A well-known option investment strategy is the so-called "calendar spread", which involves buying and selling options on the same stock with different expiration dates. If the strike prices are also ...
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177 views

Value of a call option spread

In this example: An options trader believes that XYZ stock trading at $42 is going to rally soon and enters a bull call spread by buying a JUL 40 call for $300 and writing a JUL 45 call for $...
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4k views

Why buy a vertical spread if I could instead buy a naked call?

If I believe a stock will go up, say from a price of $100, and I wish to execute an options strategy that would make me money if the stock were to rise, why would I want to setup a vertical spread ...
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247 views

Ex-dividend dates for Nikkei and Dow Jones on CFD and Spread Bet Markets?

I've found a few ex-dividend date sites for the Dow Jones (can't find any decent ones for the Japanese Nikkei Index). However the ex-dividend dates don't seem to match when I get dividend payouts on ...
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Is there an online tool to help purchasing option spreads? [closed]

I'm pretty new to futures trading and I'm wondering if there is an online tool to help look at various spread options contracts? I'm interested in getting some experience trading futures with pretty ...
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New to options trading and need help understanding an options spread risk graph. What am I missing?

Suppose the stock is $41 at expiry. The graph says I will lose money. I think I paid $37.20 for (net debit) at this price. I would make money, not lose. What am I missing? Thanks for all your input, ...
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What does “compression of spreads on high-yield debt” mean?

What did Federal Reserve Chair Janet Yellen mean when she said the following? "We’ve also seen the compression of spreads on high-yield debt, which certainly looks like a reach for yield type of ...
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Clarification on options jargon regarding spreads

Is it true that a bull put spread is the same as a credit put spread. Because if I am bullish, I wont be buying the put spread, I will be selling it, so it has got to be a credit spread. Similarly , ...
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2k views

Is an iron condor always preferable to doing a simple credit spread

What is the advantage of using a regular credit spread ( bull put or bear call spread ) over an iron condor? The profit in an iron condor will be at minimum be same as a simple credit spread( when one ...
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In what ways is IEX different than a typical dark pool or a typical exchange?

In his recent best seller "Flash Boys" (#1 of the NYT best seller list), Michael Lewis tells the fascinating story of an unlikely hero, Brad Katsuyama from RBC. Upon realizing that "the stock market ...
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270 views

How important is volume when choosing an exchange?

I'm investing some money in ETFs; buy and hold. My local currency is CHF. I have an account in Interactive Brokers. So far I've operated on the London Stock Exchange, which means I have to do a forex ...
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What do the Sizes on Bid/Ask Quotes Mean?

I have a basic question regarding equities. For this example, assume that I have a quote for KO stock which says the following: Current Price = $39.00 | Bid = 38.99 x 6800 | Ask = 39.00 x 4300 What ...
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Bid/ask spreads for index funds

Let's assume for simplicity that each company in the S&P 500 has the same market capitalization, and has a share price of 1$. Further, assume the fund allocates 1% for operation costs. So when I ...
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Does a bid and ask price exist for indices like the S&P500?

When buying a stock (say Google or Apple) at day 1 you pay the ask price of that day. When selling the stock at day 6, you get the bid price of that day. The return you made is given by [ ...
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To minimize the spread costs in shopping in the North or Europe

I just noted that my Norwegian Nordea's Visa Debit card's spread is 2,56% when I pay my shoppings with it in Estonia: >>> a=7.33 // Google showed this course in its search by 1 EUR in ...
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The spread goes to the market maker, is the market maker the exchange?

I understand that the bid-ask spread is the difference between the price a buyer is willing to pay and the price a seller is willing to take for an asset. I also understand that this difference goes ...
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Can I convert spread option into regular call or put?

I have bought spread call on stock X. After that point, the stock went up and came back. My short position is the same price as it was when I bought it 1 month back. At this point If I just clear out ...