Futures spreads.

A spread means holding a long and a short futures position at the same time to profit from the change in the price difference between them, rather than from outright direction. Spreads generally carry less risk — and lower margin — than a naked position.

Calendar (intramarket) spreads

Same commodity, different delivery months — for example, long July corn and short December corn. You're betting on how the gap between the two months moves, not on corn's overall direction.

Intermarket spreads

Two different but related markets — for instance, related grains or related interest-rate contracts. Same idea: profit from a shift in the relationship between them.

Bull vs. bear spreads

• Bull spread — structured to profit if the nearby month gains on the deferred month (a strengthening market).
• Bear spread — structured to profit if the nearby month weakens relative to the deferred month.

Why trade spreads?

Because the two legs partly offset, spreads usually have lower risk and lower margin than an outright position, and they isolate a specific view (the price relationship) rather than direction. On the exam, focus on which leg is long, which is short, and what change makes the spread profitable.

See spread questions in the free practice set.