Spread Bet on Gold
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As it stands the Gold (December) market is $737.9-738.9 with FinancialSpreads.com.
As with many markets, spreadbettors can financial spread bet on the future price of commodities. In this case spread trading on the price of Gold rise to more than $738.9 by 27-Nov-07.
With the Gold market you trade in £X per point, where a point is $0.1 of Gold movement. If your stake was £4 per point and the Gold price moves $0.4 then that would be a £16 difference to your P&L.
1) So let’s say you see the live price on an online spread betting service and it is $737.9 - $738.9 and you like the price and think that the Gold market looks like it will increase above the $738.9 mark
2) You decide to 'buy' the market. You invest £2 per point
3) The market increases. You decide to let your bet run to expiry. (The expiry date for Gold December market is 27-Nov-07)
4) The price settles at $745.7
5) Opening price = $738.9
6) Profits = ((closing level - opening level) / per point) x stake
7) = (($745.7 - $738.9) / 0.1) x £2 per point stake
8) = (6.8 / 0.1) x £2 per point stake
9) Profits = £136
But if the market didn't move as expected and had the Gold price gone down and settled at $727.9, then you would have lost on this spread trade.
5) You bought the spread at $738.9
6) Loss = ((closing level - opening level) / per point) x stake
7) = (($727.9 - $738.9) / 0.1) x £2 per point stake
8) = (-11 / 0.1) x £2 per point stake
9) Loss = -£220
Where to spread bet on Gold:
You can currently spread bet on Gold and other commodities at:
FinancialSpreads.com
Capital Spreads
"Spread Bet on Gold" written by RThomas, last updated 18-Jun-2008
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