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+Chapter 35: Futures Option Strategies for Futures Spreads 705 
+there is a major difference between the futures option calendar spread and the stock 
+option calendar spread. That difference is that a calendar spread using futures 
+options involves two separate underlying instruments, while a calendar spread using 
+stock options does not. When one buys the May soybean 600 call and sells the March 
+soybean 600 call, he is buying a call on the May soybean futures contract and selling 
+a call on the March soybean futures contract. Thus, the futures option calendar 
+spread involves two separate, but related, underlying futures contracts. However, if 
+one buys the IBM May 100 call and sells the IBM March 100 call, both calls are on 
+the same underlying instrument, IBM. This is a major difference between the two 
+strategies, although both are called "calendar spreads." 
+To the stock option trader who is used to visualizing calendar spreads, the 
+futures option variety may confound him at first. For example, a stock option trader 
+may conclude that if he can buy a four-month call for 5 points and sell a two-month 
+call for 2 points, he has a good calendar spread possibility. Such an analysis is mean­
+ingless with futures options. If one can buy the May soybean 600 call for 5 and sell 
+the March soybean 600 call for 3, is that a good spread or not? It's impossible to tell, 
+unless you know the relationship between May and March soybean futures contracts. 
+Thus, in order to analyze the futures option calendar spread, one must not only ana­
+lyze the options' relationship, but the two futures contracts' relationship as well. 
+Simply stated, when one establishes a futures option calendar spread, he is not only 
+spreading time, as he does with stock options, he is also spreading the relationship 
+between the underlying futures. 
+Example: A trader notices that near-term options in soybeans are relatively more 
+expensive than longer-term options. He thinks a calendar spread might make sense, 
+as he can sell the overpriced near-term calls and buy the relatively cheaper longer­
+term calls. This is a good situation, considering the theoretical value of the options 
+involved. He establishes the spread at the following prices: 
+Soybean Trading 
+Contract Initial Price Position 
+March 600 call 14 Sell 1 
+May 600 call 21 Buy 1 
+March future 594 none 
+May future 598 none 
+The May/March 600 call calendar spread is established for 7 points debit. 
+March expiration is two months away. At the current time, the May futures are trad­
+ing at a 4-point premium to March futures. The spreader figures that if March