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What Can You Spread Bet On?

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spread betting markets












The market has expanded so quickly that now you can spread bet on virtually any market. However it is worth realising what your actually investing in.

Shares:

Most of the best financial spread betting brokers offer spread bets for going long or short in traditional shares, from FTSE 100 right through to AIM listed companies. However the margin requirements are likely to be substantially higher for small market cap companies rising higher than 25%.

Indices:

Most providers now offer a range of indices varying from FTSE 100 to the Shanghai index of leading shares to sector bets e.g. on the Mining sector. The more exotic your selection of indice the more expensive your deal is likely to be in terms of commission costs.

The FTSE 100 for instance now has deal spreads as low as 0.8 points. This represents an incredibly low commission and is almost unbeatable against ETF trackers and other market instruments that follow the indices. Margin is also considerably low, between 2-5%.

It is worth being aware however that you are not investing in the FTSE 100 or a tracker of it. This is important because in trackers or investing in the FTSE directly you would receive dividends. In the case of a spread bet the dividends are absorbed into the price in a future or adjusted in a daily bet. In the case of a daily bet, if for instance BP declared its dividend of the equivalent of 2 points on the FTSE, it represents 2 points of capital leaving the FTSE to BP shareholders. The indice will therefore be adjusted to accommodate this down 2 points which will be credited or debited (if shorting) to your account.

In the case of a future there is no debiting or crediting, it is simply an adjusted price and no dividends will be paid. However some spread bet providers can have slightly different rules so it is worth checking this out.

Forex:

Most currency pairs are tradeable through spread bet providers. These can be in the form of future or 'spot' (current) rates.

Options:

There are limited options to bet and this is not as developed as the other markets out there in spread betting, spreads can be high and they are rarely traded online for shares. It is also worth noting whilst shares, indices and commodities have obvious underlyings (the markets followed e.g. a FTSE 100 follows the FTSE 100 which is easy to compare the price). In the case of options this transparency often does not exist.

Moreover, it is worth fully understanding what an option is before you invest as it can result in significant losses especially on margin.

Having said that, if used effectively they can offer attractive spread betting strategies to pursue and it is certainly worth looking into.

Binaries:

A wide range of binaries are available.










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