Denmark’s Saxo Bank, an online trading and investment specialist, is expanding its product portfolio for retail and institutional clients with the launch of futures spread trading.
From 18 February, clients will be able to trade futures spreads on a variety of assets across all of the bank’s platforms, including its SaxoTrader mobile apps for smartphone and tablets. The launch will enables Saxo Bank’s clients to trade intramarket futures spread as well as named calendar futures spreads on a range of key contracts including gold, oil and other commodities, interest rates, bonds and major stock indices.
A key attraction of futures spread trading is the ability to use a single order ticket to roll over futures contracts before expiry to the next maturity date, with no legging risk or spread risk.
“A calendar spread is defined as the sale of one or more contracts and the purchase of one or more offsetting futures contracts in the same market but in different a month, for example Short September Corn and Long December Corn,” said Patrice Henault, futures and listed options product manager at Saxo Bank.
“The calendar spread trader positions himself between the speculator and the hedger. Rather than take risk of excessive price fluctuations, he takes on the risk in the difference between two different trading months.
“Calendar spreads are less volatile than other forms of trading including share trading, option trading and straight futures trading. In fact, it is because of such low volatility that margins for spreads are so low. Spreads typically trend more often, more steeply and for a longer time than do other forms of trading.”
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