Spread trading involves buying one crude oil futures contract in one month and selling another crude oil futures contract in a farther out month. The goal is to profit from the expected change between the purchase and selling price of both contracts. For example, a trader could sell the March crude oil futures contact trading at $94.50 and buy the June contract for $95.80, for a difference of $1.30. If the trade widens more than the $1.30, the trader has a profit. The trader would buy a March contract and sell a June contract to close out the trade. But if the spread contracts, the trader will realize a loss.
