Nitro Spread is an order listing system within the High-Liquidity Market, allowing traders to engage in spread and basis trading. Spread trading is a strategy that capitalizes on the price difference, or spread, between related assets in different markets, often sharing the same underlying instrument or reference.
Typically, spread trading requires manually opening positions across two separate order books. With Nitro Spread, traders can execute spread trades effortlessly with a single click. All orders in Nitro Spread are guaranteed to be filled at matched quantities for each leg or not at all, minimizing price discrepancies and eliminating leg risk. Additionally, Nitro Spread supports various strategies, including funding rate farming, spot-futures carry trading, and calendar rolls.
How Does Spread Trading Work?
Spread trading commonly involves pairs like Spot versus Perpetual (e.g., Spot BTC/USDT vs. BTC/USDT Perpetual), Spot versus Futures (e.g., Spot ETH/USDT vs. Quarterly ETH/USD Futures), or two futures contracts with different expiration dates (e.g., Quarterly Futures vs. Bi-Quarterly Futures on LTC/USDT).
Skilled traders can profit by exploiting price differences (spreads) between instruments. In this strategy, two positions are opened simultaneously in opposite directions (long and short) with equal quantities. The spread is rendered delta-neutral, meaning the strategy does not involve delta risk.
Delta refers to how an instrument's price changes relative to a reference asset. For example, if the price of BTC/USDT increases by 1 USDT, the price of the BTC/USDT quarterly futures contract is expected to rise by approximately 1 USDT as well. If both Spot and Futures prices increase by 1, and a trader holds a long position in one and a short position in the other, the overall value of the positions remains unchanged (their delta risk in one is offset by the other, resulting in neutrality to price movements). This stability and protection from risk are key features and advantages of spread trading.
How to Trade Using OKX Nitro Spread
Placing an Order
- Navigate to Trading > High-Liquidity Market > Nitro Spread.
- Select the market you wish to trade: currently, BTC/USDT and ETH/USDT are available.
In Nitro Spread, choose from the available listings for the spread you want to buy or sell:
- Select Bid if you want to buy the spread.
- Select Ask if you want to sell the spread.
- Once the order book for your chosen spread appears, enter the Price and Quantity for your order.
- Execute the order after confirming the details.
Note:
- To proceed with the High-Liquidity Market, you must complete the required verification.
- If the order price surpasses the current best price in the order book (Ask when buying a spread, Bid when selling a spread), the order will be filled immediately. Otherwise, it will be added to the Bid/Ask order book.
- Orders remaining open after 7 days will be automatically canceled.
Canceling an Order
There are two ways to cancel an order in Nitro Spread:
Option 1:
- Select the tile on the Nitro Spread grid that has a circle with a number, indicating how many open orders you have for that spread.
- Cancel the specific order you wish to close from your Open Orders.
Option 2:
- Open the Nitro Spread page and locate the Open Orders section.
- Cancel the order you wish to terminate.
Expediting Open Order Execution
If you have an open order in Nitro Spread and prefer immediate execution instead of waiting, you can select Send as RFQ under your Open Orders. This requests a direct quote from qualified makers for instant execution.
What Are the Fees for Nitro Spread?
- For VIP customers, fees for Nitro Spread are 50% lower compared to executing the same trade as two individual legs in the standard order book.
- For regular customers, the standard fee rates for each leg's respective instrument apply.
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Frequently Asked Questions
What types of tokens and instruments are supported on Nitro Spread?
Currently, Nitro Spread supports major tokens like BTC and ETH, paired with USDT-margined Futures and USDT-margined Perpetual contracts. The platform plans to support more tokens and instrument types in the future. You can always check the latest supported pairs by navigating to Trading > High-Liquidity Market > Nitro Spread.
What spread combinations are currently supported?
Nitro Spread currently supports the following combinations: Spot vs. Perpetual, Spot vs. Futures, Perpetual vs. Futures, and Futures vs. Futures. For now, "Futures" includes both Quarterly and Bi-Quarterly Futures contracts.
How do I interpret the Bid and Ask prices on a spread tile?
The price on a tile indicates the spread between the filled prices of the two instruments. The spread is calculated as the price of the longer-dated instrument minus the price of the nearer-dated instrument.
- Ask: The price you receive (or pay, if the spread price is negative) when you sell the spread (Buy near-dated, Sell far-dated).
- Bid: The price you pay (or receive, if the spread price is negative) when you buy the spread (Sell near-dated, Buy far-dated).
The order of instrument dates from farthest to nearest is: Bi-Quarterly Futures > Quarterly Futures > Perpetual > Spot.
What is BBO Offset?
BBO Offset, or Best-Bid-Offer Offset, is a key metric visible before placing an order, located below the spread price. This value does not account for quantity and is solely determined by the difference between the best available price on Nitro Spread and the implied best price you would get by executing the same strategy on the Central Order Book.
A negative BBO Offset indicates that the best price on Nitro Spread is better than the implied best price from the Central Order Book. A white border around the tile also appears to highlight when Nitro Spread offers a superior price.
Is Nitro Spread liquidity shared with the Central Order Book for each instrument?
No, Nitro Spread liquidity is exclusive to the Nitro Spread system. Orders placed in Nitro Spread are not visible in the Central Order Book, and vice versa.
Can I trade each leg separately in the Central Order Book after a Nitro Spread trade is filled?
Yes. After you buy or sell a spread on Nitro Spread, each leg of the spread becomes a separate position that can subsequently be managed or traded individually within the Central Order Book.
Can my existing positions or assets from the Central Order Book be used for trading or as margin in Nitro Spread?
Yes. Because everything operates within a unified ecosystem, any existing leg positions you hold from the Central Order Book can be utilized for trading and can also serve as margin when engaging in trades on Nitro Spread.