Debit Vs Credit Spreads

Q: What is a credit and debit spread in futures (not options)?

A: The two terms refer to the pricing of a spread position.

Credit means the sell price is greater than the buy price. Debit means the buy price is greater than the sell price.

For examples, let’s say we are trading Eurodollars. The trade is buying the Sep2010 @ 98.08 and selling Sep 2009 @ 99.495. The sell price is greater than the buy price, therefore this is a credit.

If you were doing the opposite by selling the Sep2010s and buying the Sep 2009s, this would be a debit.

It’s actually no different from options spreads there. But unlike an option spread, the spread is not something that is credited to or debited from your account. It is simply a reference to the relative pricing of the contracts.