Trading Strategy Definitions

Directional Trading

Trading strategies designed to speculate on the direction of the underlying market, especially in contrast to volatility trading.

Intermarket Spread

See Spread and Intercommodity Spread.

Diagonal Spread

A spread between two call options or two put options with different strike prices and different expiration dates. See also: Horizontal Spread, Vertical Spread

Interdelivery Spread

A spread in which the long and short legs are in two different but generally related commodity markets. Also called an intermarket spread. See also: Spread

Intercommodity Spread

A spread in which the long and short legs are in two different but generally related commodity markets. Also called an intermarket spread. See also: Spread.

Accumulation

The act of buying more shares of a security over a period of time to avoid forcing the market higher with a single purchase. See also: Basing

Inside Day

An inside day is one where trading is contained within the trading range of the previous day. The longer the series of inside days that occur, the greater the likelyhood of a breakout trade opportunity. See also: Outside Day, Forex Trading Strategies, Volatility B

Index Arbitrage

The simultaneous purchase (sale) of stock index futures and the sale (purchase) of some or all of the component stocks that make up the particular stock index to profit from sufficiently large intermarket spreads between the futures contract and the index itself.

Reverse Crush Spread

The sale of soybean futures and the simultaneous purchase of soybean oil and meal futures. See also: Crush spread.

Hybrid Instruments

Financial instruments that possess, in varying combinations, characteristics of forward contracts, futures contracts, option contracts, debt instruments, bank depository interests, and other interests. Certain hybrid instruments are exempt from CFTC regul