When it comes to shares things are slightly different. If you buy a share today you pay the current market price. Spread trading companies, as we saw earlier, might offer Rolling Spreads (contracts), near month spreads (such as June) and far month contracts (such as September) and the spread will be different for each.
Now sometimes a Rolling spread may not be available and it is two weeks away from the near month contract expiring. You feel your trade will last longer than two weeks so you need to go to the far month contract. You look at the spreads:
Near month 385 – 387
Far month 388 – 391
First you notice that the far month has a wider spread – OK, so your costs will be slightly higher. But then you look at the market price on your chart and notice that it is 386. So the market mid price is in the middle of the near month spread as you would expect but the Far month spread is completely different (higher) than the market mid price. At first this seems like a bad price, you would be happy buying at 387 but not at 391, 5 points higher than the market mid price.
The point here is that the far month will often be different to the near month. This was explained in an earlier chapter and the difference is based on interest rates, dividends that might be due and other things that are a standard formula used by the spread trading company. What will happen is that over the period until the far month contract expires in September, the spread will gradually come to match the market price. So in a way, the price offered today is high but in practice the only thing that matters is the DIFFERENCE between the price you buy at and the price you sell at. So if you choose the far month for good reason then face the fact that it will cost you a few extra points in costs but the price they offer you today is not a “bad” price it is purely the correct price for that future contract.