Example: 'Buying' June National House Prices
A simple way to gain exposure to the UK housing market.
It is 1st April 2008 and you feel the UK housing market is set to drop. Our price for the June monthly survey (in £1000s) is 187.5 – 190.5.
You believe house prices will continue to fall and decide to 'sell' £1000 per point at 187.5.
A few weeks later you are proved right as the latest Nationwide Building Society figures for May reveal UK house prices have recorded their largest monthly fall since 1991. The average UK house price in May is now £173,583 and our quote on 2nd June is 180.9 – 183.9.
You 'buy' £1000 per point at 183.9 to close the trade.
The result
Your profit on the trade is:
Profit
| Closing level | 183.9 |
| Opening level | 187.5 |
| Difference | 3.6 |
Profit: 3.6 x £1000 per point = £3600
Remember of course that if the market had moved against you, you may have lost more than your initial deposit.