Master the “Spread” – The Most Underrated Market Signal 🧵💹
Ever noticed how sometimes option prices move opposite to your direction, even when your view is right?
Or how institutional traders hedge positions using multiple legs?
In this mega thread, we’ll cover 👇
✅ What Spread means (in Stocks & Options)
✅ Types of Spreads (Debit, Credit, Calendar, Ratio & more)
✅ How to identify Institutional Spreads using data
✅ Spread trading strategies (Intraday + Swing)
✅ Timeframes, Risk-Reward, Tools, & Practical Examples
Let’s dive deep 🧠💥
#stockmarketcrash
1) What is a Spread?
A Spread simply means taking two or more related positions simultaneously —
either in different strike prices, expiries, or instruments —
to reduce risk, hedge exposure, or capitalize on volatility differences.
There are two major contexts:
📊 Futures Spread: Difference between two futures prices (e.g., NIFTY OCT - NIFTY SEP)
💰 Options Spread: Combination of 2 or more options (e.g., Buy one Call, Sell another)
The goal?
👉 Manage directional risk, reduce margin, and create steady profits even in sideways markets.
2) Key Concept — “Bid-Ask Spread”
Before we move to trading strategies, understand this first 👇
Bid-Ask Spread = Ask Price – Bid Price
This is the cost of liquidity.
Narrow spread → High liquidity → Easy entry/exit
Wide spread → Low liquidity → Slippage risk
Institutions use this to spot inefficiencies or trap retail orders during volatility.