Forward Spread

The futures market involves prices for assets (commodities, currencies, stocks, etc.) at different points in time. The February price is different from the March price is different from the June price, and so on.

You can enter a contract to buy or sell the asset at some time in the future for a price you set now. The forward spread represents the difference between prices at two times.

So...you obtain a futures contract to purchase 500 barrels of oil at $75 a barrel two months from now. Oil is currently trading in the spot market at $73 a barrel. The forward spread is $2...the difference between the future price of $75 and the current price of $73.