# Need help calculating prof/losses on spreads?

#### Spcboe

##### Member
Assume I initiate a bull spread on this hypothetical spread
If XYZ commodity trades in 1000 units, price in \$ per unit

On January 1, Feb contract@ \$10, March contract @ \$11 spread difference of +\$1
January15 Feb contract@ \$12, March contract @ \$ 9 spread difference of +\$3
profit \$2 or \$2000

Here's where I am confused
On January 1 Feb contract @ \$10 , March contract @ \$ 11 spread difference of +\$1
On January15 Feb contract @ \$ 9, March contract @ \$ 6 spread difference of -\$3

I have lossed -\$1 on the long. However, I have profited on the short +\$5. I understand spreads are traded as spreads and not individual contracts. Would this be a profitable spread? Is my profit +\$4 or \$ 4000? Or is this a loss?

Much Thanks to anyone who can help.

#### ALP168

##### Member
You confused yourself.

In the first case, if you long March /short Feb contract. Your initial spread is +1 point. On Jan 15, the spread is 9-12=-3. So you're down -4 points or shows \$4000 loss. if you long Feb/short March, you'll have \$4000 profit.

In the second case, it is the same. On Jan 15 you have \$4000 loss should you long March/Short Feb contract and have \$4000 profit if you long Feb/short March.

Hope that helps.

##### Active member
Long & Short

What Alp says is correct. One more time. You don’t say much about buying and selling. But I will assume normal nomenclature and call your first the buy or long. And the second your sell or short.
On January 1 Feb contract @ \$10 , March contract @ \$ 11 spread difference of +\$1
It looks to me like you got into the spread with Feb \$1.00 below March.
On January 15 Feb contract @ \$ 9, March contract @ \$ 6 spread difference of -\$3
The Feb which you got at \$10.00 has gone down to \$9.00 costing you a \$1.00 of profits. The March, which you sold at \$11.00, has fallen to \$6.00 for a total profit of \$5.00, netting you \$4.0
I have lossed -\$1 on the long. However, I have profited on the short +\$5. I understand spreads are traded as spreads and not individual contracts. Would this be a profitable spread?
You are trading the spread differential. In this case the spread is trending in your favor until it turns.
Is my profit +\$4 or \$ 4000?
Yes!

#### Spcboe

##### Member
Thank both you guys for taking the time. Sorry, for taking so long to thank you Alps. I thought I had already left a "Thank You," post.