Oil Futures | Oil | Spread Bet | IG Index | Example: Oil

Say it is lunchtime and oil prices have been steadily rising throughout the morning. Our quote on Daily US Light Crude is 7950 – 7955.

The previous few days have been volatile and you guess the rally will not be sustained – so you decide to take a short position, 'selling' $10 per point at the lower end of our spread (7950, the 'bid' price).

This means that you will make $10 for every point that the upper end of our spread (the 'offer' price) drops below 7950, and lose $10 for every point the price rises above 7950.

Over the next few hours the US markets get into their stride and, as you predicted, sentiment changes. By mid-afternoon, oil is trading well down and at 3.15pm our quote sits at 7850 – 7855.

You are looking at 95 points of profit (7950 – 7855 = 95). You close your trade by 'buying' $10 per point at 7855, the upper end of our spread (the 'offer' price). Of course, spread betting is a leveraged product and not suitable for everyone. Had the market moved against you, you could have lost more than your initial deposit.

The result

Profit: 95 x $10 per point = $950