Shares Examples

Quarterly

Quarterly bets are designed to allow you to run a medium-term position in a share, trading over several weeks or months. We normally quote prices for the next two or three quarter months.

It’s early January 2010 and, after months of decline, Barclays shares are quoted in the stock market at 298.05–298.15p. Our price for June 2010 Barclays is 297.45–298.75.

You believe that Barclays’ share price will rise over the coming months and decide to 'buy' £8 per point at 298.75 – the offer price. Your bet is the equivalent of a position in 800 shares. This is because if you did own 800 shares, as with conventional share dealing, each penny movement in the price would be worth £8 to you. To see an example of how bet deposits are calculated visit the Deposit Rates section of our FAQs.

As you correctly predicted, Barclays rises steadily over the next few weeks and by mid-March 2010 is trading at 359.40–359.50p. Our quote, adjusted for June, stands at 358.68–360.22.

You decide to close your bet and take your profit by 'selling' £8/point at 358.68, the bid price.

The result

Your profit is calculated as follows:

Profit: 59.93 x £8 per point = £479.44

Remember of course that if the market had moved against you, you may have lost more than your initial deposit.

Daily rollover

Opening Your Bet

It is 23 March 2010 and you decide to open a position on Vedanta Resources, a global, LSE-listed mining company. The stock price is 2683.40–2683.50, and we quote a spread of 2680.72–2686.18. You ‘buy’ £10 a point at 2686.18. The share price rises throughout the day, and you believe it will continue to do so the following day. You submit a request to roll your position overnight.

As you have requested to roll your position, we close your position at 2716.72 at the end of the day, and you realise your profit of £320.50:

Profit on deal: 30.54 x £10 = £305.40

We then calculate the adjusted opening price.

Interest Adjustments on Long Spread Bets

Interest adjustments to opening prices are calculated daily in relation to the latest one-month interbank offered rate of the currency in which you are dealing. They also incur a rollover fee.

Therefore, the annual interest adjustment rate on bet on a sterling denominated share is found by adding the latest one-month LIBOR (London Interbank Offered Rate) to a small rollover fee. On 23 March 2010, LIBOR was at 0.248%, so, assuming a rollover fee of 2.5%, the annual interest adjustment would be 2.748%:

This annual rate is then divided by 365 to ascertain the daily rate:

The daily rate is then added as a percentage of your opening price:

Your new opening price is 2716.9238. This interest is added to reflect the cost of borrowing money to fund a position in the underlying market. It is cheaper to roll a position than to close and reopen the position yourself, as you do not need to pay a new spread.

Closing Your Bet

Despite your prediction, Vedanta Resources share price begins to fall the following day. By mid morning on 24 March 2010, our price is 2644.85–2650.25.You decide to close your position before the market falls any further. You ‘sell’ at the bid price of 2644.85. Your loss on the second day is calculated in the following way:

Loss on deal: 72.0738 x £10 = £720.74

The combined total for the two day's dealing is therefore a loss of £415.34

Selling short

Opening Your Bet

It is 23 March 2010 and you decide to open a position on Vedanta Resources. The stock price is 2683.40–2683.50, and we quote a spread of 2680.72–2686.18. You believe the company’s stock is set to fall, and so ‘sell’ £10 a point at 2680.72. To see an example of how bet deposits are calculated visit the Deposit Rates section of our FAQs.

Against your expectations, the share price rises throughout the day, but you still believe it will fall the following day. You submit a request to roll your position overnight.

As you have requested to roll your position, we close your position at 2710.52 at the end of the day, and you realise a loss of £290.80:

Loss on deal: 29.8 x £10 = £290.80

We then calculate the adjusted opening price.

Interest Adjustments on Short Spread Bets

Interest adjustments to opening prices are calculated daily in relation to the latest one-month interbank offered rate of the currency in which you are dealing. They also incur a rollover fee.

Unlike long positions, interest adjustments on a short position can result in either a higher or a lower opening price, because the rollover fee is subtracted from, rather than added to, the interbank offered rate when calculating the adjustment.

Therefore, if you have a position on a sterling denominated share, and the London Interbank Offered Rate (LIBOR) is greater than the rollover fee, the opening price will be higher than the closing price; conversely, if LIBOR is less than your financing fee, the opening price will be lower than the closing price.

On 10 March 2009, LIBOR was 1.2181%, which, assuming a rollover fee of 2.5%, means that the opening price will be lower than the closing price:

This annual rate is then divided by 365 to ascertain the daily rate:

The daily rate is then added as a percentage of your opening price:

Your new opening price is 2710.5037. This adjustment mirrors the interest that would accrue on profits made by selling shares in the underlying market. It is cheaper to roll a position than to close and reopen the position yourself, as you do not need to pay a new spread.

Closing Your Bet

As you predicted, Vedanta Resources’ share price begins to fall the following day. By mid morning on 24 March 2010, the spread price is 2647.35–2652.75. You decide to close your position and take your profit. You ‘buy’ at the offer price of 2652.75. Your profit on the second day is calculated in the following way:

Profit on deal: 57.7537 x £10 = £577.54

The combined total for the two day's betting is therefore a loss of £371.58: