UK SPREAD
BETTING OPTIONS - Financial
Spread Betting
How does Spread Betting work on the Financial markets?
In essence, Spread Betting on financial markets, including
the Stock Exchange, is exactly the same as Sports Spread
Betting. There are many different areas that you can partake
in financial spread betting, for example:
a) Individual shares
You can place spread bets on the changing share value of
all the UK's largest quoted companies, as well as many of
the larger foreign companies.
Spreads offered will take into account the cost to the
bookmaker of buying and holding actual shares in the companies
to enable them to hedge their own risks.
The spread offered will always be bigger than the bid and
offer prices of a share, but you will avoid stamp duty,
capital gains tax and commission by spread betting.
Spread bets on particular shares run for fixed periods
before expiring, e.g. 6 months. You can take on a spread
bet or close a spread bet at any time, but if you want a
bet to continue through one period into another, you will
usually have to pay extra. This does make spread betting
inefficient for long-term investing, but it is a great way
to speculate on an company's share price.
Another advantage of spread betting over traditional share
buying is that it is easy to make a profit from a stock
going down (losing value). You can do this with normal share
buying, but it can require special arrangements and would
usually only be for a short period, whereas spread bet down-bets
can be left to run for months.
b) Stock Market Indices
Bookmakers will allow you to place spread bets on many
of the London and world's stock market indices, e.g. the
FTSE100, the Dow Jones (US) or the Nikkei (Japan).
This allows you to gamble on market trends, rather than
run the risk of a specific company.
c) Currencies
Spread betting on exchange rates is popular with speculators,
as it means they don't incur commissions or high dealing
spreads. As with other spread bets, you will usually be
charged for rolling a spread bet on from one period to another.
e.g. If you place a spread bet on the Dollar-Euro exchange
rate in November, you may need to pay a small fee to roll
it on into December.
Sports Spread Betting
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