Stocks and Commodities Magazine

Option Spread Trading in Commodities

Should commodity option spread traders be placing limit orders as packages or on each individual option of the spread?

When trading option spreads, traders intend to execute legs of the trade simultaneously. But it doesn’t always happen that way. Aggressive or skilled traders may enter or exit a spread one leg at a time and attempt to time their optimal fill prices. 

There are additional risks when doing this and it has the potential to backfire. Regarding simultaneous entry of option legs to create a spread strategy, whether it is best to enter the order as a package on a single ticket, or enter each leg individually on multiple tickets depends on the market being traded.

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