Chapter 35: Futures Option Strategies for Futures Spreads 721 
Futures spreads fall into two categories - intermarket and intramarket. They 
are important strategies because many futures exhibit historic and/or seasonal ten­
dencies that can be traded without regard to the overall movement of futures prices. 
Options can be used to enhance these futures spreading strategies. The futures 
calendar spread is closely related to the intramarket spread. It is distinctly different 
from the stock or index option calendar spread. 
Using in-the-money long option combinations in lieu of futures can be a very 
attractive strategy for either intermarket or intramarket spreads. The option strategy 
gives the spreader two ways to make money: ( 1) from the movement of the underly­
ing futures in the spread; or (2) if the futures prices experience a big move, from the 
fact that one option can continually increase in value while the other can drop only 
to zero. The option strategy also affords the strategist the opportunity for follow-up 
action based on the equivalent futures position that accumulates as prices rise or fall. 
The concepts introduced in this chapter apply not only to futures spreads, but 
to intermarket spreads between any two entities. An example was given of an inter­
market spread between futures and a stock sector index, but the concept can be gen­
eralized to apply to any two related markets of any sort. 
Traders who utilize futures spreads as part of their trading strategy should give 
serious consideration to substituting options when applicable. Such an alternative 
strategy will often improve the chances for profit.