This example demonstrates how a stock index spread bet works.
All our indices are tax-free: the only price you pay is the dealing spread.
Our FTSE® 100 DFB price stands at 5925-5926.
This means you can 'sell' at 5925 if you think the price will fall, or 'buy' at 5926 if you think it will rise.
|You think the market is due to fall, so you 'sell'. You decide to risk £10 per point.||You think the market is going to rise, so you choose to 'buy'. You decide to risk £10 per points.|
|You 'sell' £10 per point at 5925.||You 'buy' £10 per point at 5926.|
|Against predictions, the market rises. You opt to cut your losses and close your bet.||As you predicted, the market rises and you choose to take your profit.|
|The price we quote is 5940-5941.||The price we quote is 5952-5953.|
|In order to close a 'sell' bet you need to 'buy' at the top end of the spread.||To close a 'buy' bet you simply 'sell' at the bottom end of the spread.|
|You 'buy' £10 per point at 5941.||You 'sell' £10 per point at 5952.|
Your loss is calculated as follows:
Opening price 5925
Closing price 5941
Loss: 16 x £10 = £160
Your profit is calculated as follows:
Opening price 5926
Closing price 5952
Profit: 26 x £10 = £260
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.