Creating Futures Spreads in TWS

Study Notes:

Accessing the Combo Selection Tool

Investors can easily create future spreads using TWS by using the Combo Selection tool. To access the Combo Selection tool the investor types the future symbol they would like to trade into the Order Entry Panel. For this example they will use ES and scroll down to E-mini S&P 500, choose Combinations and selects Future Spreads (Smart). The Combo Selection Tool will appear.

Sections of the IBKR Combo Selection Tool

The combo selection tool consists of three tabs: Multiple, Strategy, and Pair or Leg-by-Leg. For future spreads the investor will use the Multiple tab. In the top left-hand side is the symbol. To the right next to Type is FUT. If the investor wanted to trade a futures option spread, they could switch to FOP in the drop down. Continuing to the right the exchange and multiplier are listed.

Selecting a Spread in the IBKR Combo Selection Tool

Directly underneath the investor can choose between a calendar spread in which a buy order indicates that they are selling the front month and buying the back month, or a reverse calendar spread which is the opposite. On the left-hand side the investor can choose the front month then either pick the back month or duration to create a combination in the panel to the right. If the investor wants to select from multiple combinations, they can hold the control key and select multiple months for Front, Back, and Duration. In this example the investor chooses the March 15^th, 2024, ES future for the front month and the June 21^st, 2024, ES Future for the back month. To populate the Order Entry Panel, they click on the combination in the strategy pane to the right and click “OK”.

A message window may appear explaining an alternative way of entering the spread by using the symbols for each month.

Submitting a Futures Spread Trade in TWS

The spread will populate the Order Entry panel where the investor can choose between creating a buy or sell order by clicking on the bottom left-hand corner. In the middle of the panel, they can adjust the quantity, order type, price if applicable, and Time-in-Force. When the investor is ready, they can click submit and the order confirmation window will appear. Once the investor reviews the information and is satisfied, they can click Transmit to submit the order.

The order will populate the Activity panel and the investor may modify the order type, Time-In Force, and price or cancel the order if it hasn’t yet been filled.