When it comes to spreading your investment across multiple assets, one popular way to do this is through ‘spread trading’. Here’s a quick primer on how spread trading works: 1. You establish a price agreed between you and a counterparty for a specific asset or instrument. 2. You then buy or sell the asset or instrument at this agreed-upon price. 3. Your profit or loss is determined by the difference between the price at which you sold the asset or instrument and the price at which you bought the asset or instrument. When spread trading, it’s important to understand the different terms used in the trading world. A few key terms you’ll likely encounter when trading spreads include: The ‘spread’: The difference between the buy and sell prices for an asset or instrument. The ‘strike price’: The price at which an asset or instrument can be sold, also known as the minimum price an order can be filled at. The ‘offsetting position’: An open position in the underlying asset or instrument that allows you to sell the asset or instrument if the spread reaches the strike price. Now that you know a

little bit about spread trading, it’s time to learn how to do it. When you spread trade, you are buying and selling the same security or asset at different prices in order to capture a spread. This is accomplished by buying the security or asset at a lower price and selling it at a higher price. In order to make money from spread trading, you need to see a spread reach the strike price. Here’s an example of how a spread trade works. Say you are interested in buying Apple (AAPL) stock at $450 per share and selling it at $500 per share. If the stock is trading at $450 and $500 per share, you would purchase 100 shares of Apple at $450 per share and sell them at $500 per share, for a $50 spread. If the stock is trading at $460 per share, you would purchase 60 shares of Apple at $460 per share and sell them at $500 per share, for a $40 spread. If the stock is trading at $470 per share, you would not be able to purchase shares at $470 per share, as they are not available for sale. If the

spread on the market increases to $500 per share, the investor is able to purchase shares in the market at $500 per share. If the spread falls to $450 per share, the investor can purchase shares at $450 per share. Investor Profit If the spread on the market increases to $500 per share, the investor makes a profit of $100 per share. If the spread falls to $450 per share, the investor makes a profit of $50 per share.