This price can be a positive or a negative number based on the first month quoted in the spread. So once again in the Soybean example, July is 10 cents below November so the spread is quoted at 10 cents. The reason spreads are so popular is they generally offer a natural hedge to the position intended by the trader. With that spread in place, if the Soybean complex as a whole goes higher, generally both the July and the November contracts will go higher. Another benefit of the future spread is that the margin for most spreads is a fraction of the margin for the individual futures contract.
Some people misinterpret that to mean that the spread is more conservative.
This is not the case. Spreads can make or lose money in a variety of different ways, and it is impossible to list them all here. In general though, spread trading can offer significant advantages to regular futures contracts. This is by no means meant to be an exhaustive study of Futures spreads but a quick introduction to this valuable arena. Please discuss this with your broker or call us for recommendations on further reading materials.