Spreads

Spreads show the difference in price between two securities.

A spread Trading involves buying one security and selling another.
Profit opportunities arise from the narrowing or expanding of the difference between the two securities.

Spreads are typically constitute between securities with high correlation.
Exploit temporarily disrupted relationships  between securities.

Opening at the same time Long & Short position we expect that one of securities will rise faster (or fall more slowly) than the price of other.

You can also spread a single security, by buying one contract and selling another with different maturity.

Spreads by type

Intramarket spread.
Buying one contract and selling another with different maturity.

Intermarket spread.
Long futures position in one market, and short futures position of the same month in another market.

Inter-exchange spread.
Creating spreads between contracts in similar markets, but on different exchanges.

Hedge
Ownership of the underlying and offsetting with a futures contract.