Risk Control on Intermarket Spreads by Using Option

This paper use No-arbitrage rules and arbitrage pricing theory (APT) to make metal intermarket spreads, improve the traditional spread model by using this new option of future, trying to build the more practical handling model of metal spreads which many investors are more likely to choose. Therefore, most market speculators can choose a small section of the risk area (the right of price is different), but no longer force to face the overall price risk depending on their own strengths and needs. Thereby, it reduces to some extent the futures market risks through buying option or give up options.