FTSE Spread Betting
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At the moment the FTSE (September) market is trading at 6,265 - 6,269 with FinancialSpreads.com.
In other words, you can bet on the FTSE 100 being below 6,265 or above 6,269 by 21-Sep.
It should be noted that with the FTSE 100, you trade in £X per point, where a point is 1 point of FTSE movement. For example if your stake was £2 per point and the FTSE moves 30 points then that would be an £60 difference to your bottom line.
For example, let's say you like the spread that FinancialSpreads.com are offering ie the spread of 6,265 - 6,269. And let's say you've done your analysis and…
Spread Betting on the FTSE 100 Example
1) You think the FTSE 100 should go up by the closing date of 21 Sep
2) You decide you want to 'buy' the market. You invest £5 per point of FTSE movement
3) The market increases. You let the spread bet run until the expiry date
4) The FTSE closes at 6,301
5) Opening value = 6,269
6) Profit = (closing level - opening level) x stake per point
7) Profit = (6,301 - 6,269) x £5 per point stake
8) Profit = 32 x £5 per point stake
9) Profit = £160
Nevertheless, had the FTSE 100 not performed as strongly and finished at a lower value, let's say 6,195, you would have made a loss on this spread bet
5) You bought the market at 6,269
6) Loss = (closing level - opening level) x stake per point
7) Loss = (6,195 - 6,269) x £5 per point stake
8) Loss = -74 x £5 per point stake
9) Loss = - £370
"FTSE Spread Betting" written by RThomas, last updated 12-Sep-2007
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