Spread Margins

Discussion in 'Risk Management' started by J-S, Oct 30, 2007.

  1. J-S


    Can anyone please confirm:

    Do 'margin requirements' differ if I place 'spread order' with broker ie simulanously buy march soy, sell nov soy, Versus place separate orders: buy the march soy, then later on a different order sell the nov soy?

    I'm told by my broker that lower spread margins are only eligible on orders specifically placed as 'spread orders', with the later type of order incuring the normal full margin requirements. Seems a bit odd since the positions are essentially the same?

    Thanks if anyone can clarify.
  2. minmike


    CME gives spread credit no matter how you get in the trade. you either have a spread on at the end of the day or not. Not sure about anyone else.
  3. you still get spread price even if you leg into it. if your broker say otherwise he's wrong. all i trade is spreads pretty much, i leg in all the time.
  4. J-S


    That's great thanks.
  5. His broker is 100% correct.

    If it's in the "process" of being legged then it isn't a spread but rather an OUTRIGHT that PERHAPS he'll spread off.

    Bean spreads are a quarter cent wide. In fact it's tighter to place the order as a spread than to leg it. If he's legging because he wants to scalp in then he's outright.

    For EOD margins it makes no diff how it was executed but for DT margins it's a spread or it isn't.