Shares Examples
Daily
Our Daily bets on shares are offered at extremely narrow spreads, giving ideal flexibility and control over the short-term.
Opening the Position
It 10 March 2009 and Vodafone is trading in the stock market at 114.10. Our Daily quote for Vodafone is 114.05/114.15 and you feel that the stock will rise in the short term, so you choose to 'buy' £50/point at 114.15, our offer price. This means that you make £50 for every point our quote rises above 114.15 and you lose £50 for every point that our quote falls below 114.15.
Closing the Position
Vodafone makes strong gains, and, later in the day, we are quoting a spread of 120.30/120.40. You decide to 'sell' at 120.30, our bid price.
The profit on the position is calculated as follows:
Profit on deal
| Closing level | 120.30 |
| Opening level | 114.15 |
| Difference | 6.15 |
Profit: 6.15 x £50 = £307.50
Remember, spread betting is a leveraged product which can result in losses in excess of your initial deposit. Had the market moved in the opposite direction, you would have lost £50 for every point it fell below 114.15.
If you had felt that Vodafone's stock would continue to rise on the following day, you could have chosen to roll your bet.
*Tax law can be changed or may differ depending on your personal circumstances.
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 is early August 2008 and Barclays shares are quoted in the stock market at 377/377.5p. Our price for December 2008 Barclays is 373 - 376.5.
You decide to 'buy' £8/point at 376.5, 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.
Suppose Barclays rises steadily over the next few weeks and one day in early September is trading at 448/448.5p. Our quote, adjusted for December, is 443.2 - 446.7.
You decide to close your bet by 'selling' £8/point at 443.2, the bid price.
The result
Your profit is calculated as follows:
Profit on deal
| Closing level | 443.2 |
| Opening level | 376.5 |
| Difference | 66.7 |
Profit: 66.7 x £8 per point = £533.60
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 10 March 2009 and you decide to open a long position on daily Vodafone. The stock price is 114.10, and we quote a spread of 114.05/114.15. You buy £10 a point at 114.15. The share price rises throughout the day, and you believe it will continue 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 120.30 at the end of the day, and you realise your profit of £61.50:
Profit on deal
| Closing Level | 120.30 |
| Opening Level | 114.15 |
| Difference | 6.15 |
Profit on deal: 6.15 x £10 = £61.50
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 10 March 2009, LIBOR was at 1.2181%, so, assuming a rollover fee on 2.5%, the annual interest adjustment would be 3.7181%:
| LIBOR: | 1.2181% |
| Rollover Fee: | + 2.5% |
| Annual Adjustment | : 3.7181% |
This annual rate is then divided by 365 to ascertain the daily rate:
| Annual Adjustment: | 3.7181% |
| Days in a Year: | ÷ 365 |
| Daily Adjustment: | 0.0102% |
The daily rate is then added as a percentage of your opening price:
| Closing Level: | 120.30 | |
| Daily Adjustment: | + 0.0123 | (0.0102% of 120.30) |
| New Opening Price: | 120.3123 |
Your new opening price is 120.3123. 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, Vodafone begins to fall the following day. By late afternoon on 11 March 2009, the spread price is 115.95/116.05. You decide to close your position before the market falls any further. You sell at the bid price of115.95. Your loss on the second day is calculated in this way:
Loss on deal
| Opening Level: | 120.3123 |
| Closing Level: | 115.95 |
| Difference: | 4.3623 |
Loss on deal: 4.3623 x £10 = £43.62
The combined total for the two day's dealing is therefore a profit of £17.88:
Combined Profit/Loss
| March 10 2009: | £61.50 |
| March 11 2009: | -£43.62 |
| Total Profit: | £17.88 |
Remember of course that if the market had moved further against you, you may have lost more than your initial deposit.
Selling short
Opening Your Bet
It is 10 March 2009 and you decide to open a short position on Vodafone. The market price is 114.10, and we quote a spread of 114.05/114.15. You sell £10 a point at 114.05. The share price rises throughout the day, but you believe that 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 120.40 at the end of the day, and you take a loss of £63.50:
Loss on deal
| Closing Level | 120.40 |
| Opening Level | 114.05 |
| Difference | 6.35 |
Loss on deal: 6.35 x £10 = £63.50
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:
| LIBOR: | 1.2181% |
| Rollover Fee: | - 2.5% |
| Annual Adjustment | : -1.2819% |
This annual rate is then divided by 365 to ascertain the daily rate:
| Annual Adjustment: | -1.2819% |
| Days in a Year: | ÷ 365 |
| Daily Adjustment: | -0.0035% |
The daily rate is then added as a percentage of your opening price:
| Closing Level: | 120.40 | |
| Daily Adjustment: | + -0.0042 | (-.0035% of 120.40) |
| New Opening Price: | 120.3958 |
Your new opening price is 120.3958. 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, Vodafone begins to fall the following day. By late afternoon on 11 March 2009, the spread price is 115.95/116.05. You believe that the price will fall no further, and you decide to close your position by buying at the offer price of116.05. Your profit on the second day is calculated in this way:
Profit on deal
| Opening Level: | 120.3958 |
| Closing Level: | 116.05 |
| Difference: | 4.3458 |
Profit on deal: 4.3458 x £10 = £43.46
The combined total for the two day's betting is therefore a loss of £20.04:
Combined Profit/Loss
| March 10 2009: | -£63.50 |
| March 11 2009: | £43.46 |
| Total Loss: | £20.04 |
Remember of course that if the market had moved further against you, you may have lost more than your initial deposit.
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