House prices example
A simple way to gain exposure to the UK housing market.
It is October 2011 – the UK housing market has suffered some severe drops, but you believe it is going to bounce higher. Our price for the September 2012 monthly survey (in £1000s) is 150.2-153.0.
Opening the position
As you believe house prices will start to rise, you 'buy' £1000/point at 153.0.
Over the next few months, the housing market makes a small improvement, and the Halifax house price survey figures start to rise.
Closing the position
In February 2012 our quote for September is 157.7-160.2. You are unsure whether the rise will continue and decide to close the position, 'selling' £1000/point at 157.7 to close.
Your profit on the bet is calculated as follows:
| Profit on deal | |
|---|---|
| Closing level | 157.7 |
| Opening level | 153.0 |
| Difference | 4.7 |
| Profit on deal: 4.7 x £1000 per point = £4700 | |
Of course, had the market moved in the opposite direction, you would have made a loss that may have exceeded your initial margin.
Tried CFD trading?
Spread bets are leveraged products. Spread betting may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.