With a quarterly spread bet
Quarterly bets are based on Futures prices and
are, as the name suggests, valid for a quarter. However, you do not
need to hold your bet until expiry – you can close it at any
time. With quarterly bets, all financing and trade costs are
built into the spread. There is no additional daily financing
or trade commission to pay.
You should read this example in conjunction with our Spread Betting on Shares information
page.
If ABC Plc current share price was 599 -
600.
Finspreads quotes 604.1 – 608.4 for the ABC Plc June
Contract.
The Finspreads quote reflects the cost of trading and the cost of
providing a price for ABC Plc shares until the quarterly bet
expires- known as the cost of carry.
Opening a position
If you expect the share price to rise before
June, you would buy ABC Plc June at 608.4 (the offer price).
To trade the equivalent of 1,000 shares you would buy at £10 per
point (or penny).
Margin requirements
To place your trade, you must have sufficient
funds on account to cover the initial margin. In this example, ABC
Plc has an initial margin rate of 10%, so the initial margin is
calculated as follows:
Opening level of bet x stake x 10%
608.4 x £10 x 10% = £608.40.
Closing your position
Finspreads quotes 632.5 – 642.5 for
the ABC Plc June Contract.
As the market has moved in your favour you decide to close your
position and take your profit, so you sell ABC plc June at 632.5
(the bid price), and your profit is calculated as follows:
632.5 (closing price) - 608.4 (opening price)
= 24.1 points
24.1 x £10 (stake) = £241 profit
Daily Rolling Bets are based on the current
underlying market price. The cost of financing is not built
into the spread, so any positions held overnight will be subject to
a financing charge.
If you have sufficient funds in your account
to meet the margin requirements, a Daily Rolling Bet is
automatically rolled over to the next day. At the market
close, your open position is closed and re-opened at the same price
– the end of day valuation – and the overnight financing charge is
automatically applied. Rolling bets can be opened and closed
at any time during normal trading hours.
If ABC Plc was quoted at 560.25 /
561.75.
If you expect the share price to rise, you would buy at 561.75 (the
offer price).
To trade the equivalent of 1,000 shares you would buy at £10 per
point (or penny).
Opening a position
To place your trade, you must have sufficient
funds on account to cover the initial margin. In this example, ABC
Plc has an initial margin rate of 10%, so the initial margin is
calculated as follows:
Opening level of bet x stake x 10%
561.75 x £10 x 10% = £561.75
Closing your position
Two days later, the share price of ABC Plc
has fallen to 540.25 / 541.75.
You decide to close your position and realised you loss, so you
sell ABC plc at 540.25 (the bid price).
Your loss is calculated as follows:
540.25 (closing price) – 561.75 (opening
price) = 21.5 points
21.5 x £10 (stake) = £215 loss
Overnight financing charge
As you held the position for two days (and two
nights), you have been charged two nights’ financing as
follows:
First night: Value of your exposure to
the market at the end of the day (£561.75) x LIBOR +2% (4.5%*) /
number of days in the year (365) = £0.06.
Second night: The share price is slightly higher, giving a
financing charge of £0.08.
Therefore a total of £0.06 + £0.08 will be
deducted as financing charges.
*Assuming LIBOR is at 2.5%
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