2025-04-24 15:53:29Spread Trading on Bybit provides a simplified way to enter trades, allowing traders to capitalize on spreads with just a few clicks. It involves simultaneously buying and selling two financial instruments, such as Spot, Perpetual or Expiry contracts with different expiration dates, to hedge risks and optimize potential returns.
Benefits of Spread Trading
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Locked-in spread: Gain peace of mind knowing that the difference between the entry prices of the two legs exactly matches your order price.
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Atomic execution: Enjoy fills with matching quantities for both legs, or no execution at all, eliminating leg risk.
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Simplified trading: Execute spread trades seamlessly with just a few clicks, saving the trouble of placing and managing separate orders.
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Effective hedging: Offset market volatility by taking opposite positions, minimizing potential losses from adverse price movements.
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Strategic flexibility: Utilize advanced strategies such as Funding Rate Arbitrage, Futures Spread, Carry Trade and Perp Basis with ease.
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Lower costs: Pay 50% less in trading fees compared to placing separate orders in the order book — more savings, more profits.
Understanding Key Terms
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Spread |
The price difference between the two legs of a trade. Whether you make a profit or loss depends on your order direction and how the spread changes by the time you exit.
Note: A spread is considered to have increased or decreased based on its numeric value, not the absolute difference. For example, if your entry spread (order price) is -100 and it changes to -80 at exit, the spread has increased. If it changes to -120, the spread has decreased. |
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Order Price |
The spread between the far leg's entry price and the near leg's entry price, which can be positive, negative or zero. |
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Order Quantity |
The size of the combo. Once executed, both legs will hold a position of the same size. |
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Atomic Execution |
A trade execution mechanism that ensures both legs are filled in equal quantities or not executed at all. |
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Combo |
A paired trade consisting of two offsetting legs with different expiration dates, such as Expiry & Spot, Expiry & Expiry, Expiry & Perpetual or Perpetual & Spot. |
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Near Leg vs. Far Leg |
The near leg is the position that expires first, while the far leg has a later expiration date.
Note: Instruments are ranked from nearest to farthest as follows: Spot > Perpetual > near-term Expiry > forward Expiry. |
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Order Direction |
The Buy or Sell direction of a combo, with the far leg following the same direction:
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Supported Orders & Modes in Spread Trading
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Order Type |
Limit orders and Market orders |
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Order Strategy |
Post-Only, Good-Till-Canceled (GTC), Immediate Or Cancel (IOC) and Fill Or Kill (FOK) |
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Position Mode |
One-Way |
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Margin Mode |
Cross Margin and Portfolio Margin |
How It Works
Spread Trading involves pairing different types of instruments, such as Spot and Perpetual, Spot and Expiry, Perpetual and Expiry, or two Expiry contracts with different expiration dates (e.g., Quarterly vs. Bi-Quarterly).
By simultaneously opening two opposite positions (long and short) in equal quantities, traders can profit from price differences (spreads) between these instruments. The Spread Trading strategies are designed to be delta-neutral, eliminating exposure to directional price movements.
Understanding the Calculations
Order Price
In Spread Trading, the order price represents the spread between the far leg's entry price and the near leg's entry price, which can be positive, negative or zero. For example, an order price of 10 means the far leg's entry price is 10 higher than that of the near leg, while an order price of -10 means it's 10 lower.
To ensure that the order price always reflects the spread you intend to trade, each leg's entry price is automatically calculated based on the order price and the mark prices of both legs. The formulas are as follows:
Order Price = Far Leg's Entry Price − Near Leg's Entry Price
Far Leg's Entry Price = (Far Leg's Mark Price + Near Leg's Mark Price + Order Price) ÷ 2
Near Leg's Entry Price = (Far Leg's Mark Price + Near Leg's Mark Price − Order Price) ÷ 2
Example
Let's say Alice sells a Spot-Perpetual combo at an order price of $50. If the Spot index price is $1,000 and the Perpetual mark price is $1,100, then:
Perpetual Entry Price = ($1,100 + $1,000 + $50) ÷ 2 = $1,075
Spot Entry Price = ($1,100 + $1,000 − $50) ÷ 2 = $1,025
Note: For Spot, the index price is used instead of the mark price.
Profit Scenarios
Scenario 1: Buying a Combo
Buying a combo means buying the far leg and selling the near leg. If you buy a combo at a specified price, you'll profit when the spread between the two legs increases. P&L is calculated the same way as with regular orders.
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Symbol |
Expiry |
Perpetual |
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Side |
Buy |
Sell |
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Leg |
Far Leg |
Near Leg |
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Mark Price |
90 |
83 |
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Qty |
3 |
3 |
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Order Price |
-3 |
-3 |
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Entry Price |
85 |
88 |
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Exit Price 1 |
90 |
89 |
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Realized P&L 1 |
15 |
-3 |
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Exit Price 2 |
83 |
90 |
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Realized P&L 2 |
-6 |
-6 |
Scenario 2: Selling a Combo
Selling a combo means selling the far leg and buying the near leg. If you sell a combo at a specified price, you'll profit when the spread between the two legs decreases. P&L is calculated the same way as with regular orders.
|
Symbol |
Expiry |
Perpetual |
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Side |
Sell |
Buy |
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Leg |
Far Leg |
Near Leg |
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Mark Price |
90 |
83 |
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Qty |
3 |
3 |
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Order Price |
11 |
11 |
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Entry Price |
92 |
81 |
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Exit Price 1 |
94 |
83 |
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Realized P&L 1 |
-6 |
6 |
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Exit Price 2 |
93 |
83 |
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Realized P&L 2 |
-3 |
6 |
Fees
Fees for Spread Trading are 50% lower compared to placing two separate orders for each leg in the regular order book. VIP users enjoy the 50% discount based on their existing VIP fee rates.
Notes:
— If Spot is involved, you can enable leverage for Margin Trading or keep it disabled for regular Spot trading.
— Leverage settings can be adjusted individually for each leg, with up to 10x for Spot and 100x for Futures.
— Spread Trading offers a seamless way to place spread orders. Once executed, both legs behave like regular positions, following standard margin requirements and liquidation rules. You can manage or close these positions either on the Spread Trading page or in their respective markets.
To learn more about Bybit Spread Trading, check out the following articles:
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