Spread Bets Examples
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& Spread Bets Trading Examples, so keep checking back!
It’s the 4th Feb and the UK 100 June is trading at 6512. The official contract expiration is 20th June (Please see market information sheets for market expiration)
ODL are quoting a two way price in UK 100 June:
FTSE June SELL 6510 - 6514 BUY
You have two options:
OPTION 1: You think the market will rise and BUY £10 per point at 6514.
OPTION 2: You think the market will fall and SELL £10 per point at 6510.
20th June: Market expires at 6700
You were right to BUY as the market rose higher than your opening trade level.
The spread bet was left open until expiry, therefore ODL will automatically close the bet for you at the settlement price of 6700
Your profit is the difference between the opening price and the closing price multiplied by your stake.
Opening Level 6514
Closing Level 6700
Difference 186
You bet £10 per point
PROFIT: 186 x £10 per point = £1860
Your view to SELL was incorrect as the market rose higher than your opening trade level instead of falling.
The spread bet was left open until expiry, therefore ODL will automatically close the bet for you at the settlement price of 6700
Your loss is calculated by the difference between the price you sold at and the price you bought at multiplied by your stake.
Opening Level 6510
Closing Level 6700
Difference -190
You bet £10 per point
LOSS: -190 x £10 per point = -£1900
The previous example is an illustration of a trade held to expiration. You are not obligated to leave a position to expiry; you can close the position at any time before the expiry date.
To close an open position you must trade out of that position by obtaining a new quote from ODL Markets then trade an equal and opposite amount to your open position.
For example, if you bought £10 of UK 100 June, and wish to close the entire trade, you must sell £10 of UK 100 June.
If you do not wish to close a position you have the option to ‘roll’ the bet forward to the next contract period. In the case of the example above (UK 100 June) you would have the option to ‘roll’ this contract into the next available future month which would be September (or another month if available). This would entail selling the UK 100 June position while simultaneously buying a September position.
To roll quarterly contracts or for further information on the ‘rolling’ process, please call the dealing desk on +44 (0)20 7903 6363
Legal Disclaimer: Spread Betting is a leveraged product and carries a high degree of risk to your capital and it is possible to lose more than your initial investment. Only speculate with money you can afford to lose.
Spread betting may not be suitable for all investors, therefore ensure you fully understand the risks involved, and seek independent advice if necessary.
ODL Markets is a trading name of ODL Securities Limited, authorised and regulated by the Financial Services Authority. FSA Register number 171487
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