Spread betting on stocks and shares allows you to go long or short on a stock without owning the physical shares. There are tax efficiencies by spread betting on stocks and shares with Financial Spread Betting as there is no capital gains taxes and income tax payable in the UK.
Financial Spread Betting offers you a vast range of Global indices to spread bet on including UK 100, WALL STREET, DAX and S&P 500. Many of our bets on indices are quoted 24 hours a day. This means you can react to global stock market news and gain exposure even when the underlying market is closed. Financial Spread Betting have some of the tightest spreads around.
Trading Example
You think company ABC is about to buy company XYZ. You feel that this will result in a rise in share price for company ABC so you decide you are going to place a trade. You will buy (go long) in this instance.
The Financial Spread Betting price of company ABC is 470p - 471p. You decide to open a buy (go long) bet on our daily rolling cash bet of £1 per point of ABC at the higher price of 471. This equates to owning 100 shares of company ABC, actual shares at a price of 471p. The value of the shares is calculated by multiplying the stake (in this case £1) by the price you have paid, so in this example the value of the bet would be £471. The result is also known as the total trade consideration.
As Financial Spread Betting is traded on margin, a small percentage of the total trade consideration is required to secure the trade, in this example the margin requirement is 10%, and therefore you need only £47.10 in your account with us to open the bet (£471.10 x 10%). Please remember sometimes the markets move adversely therefore we may require further funds from you to cover your open losses.
The price doesn’t really fluctuate over the next 4 days so you decide to keep your position open allowing the trade to rollover.
On the 5th day the takeover goes thought resulting in a rise in company ABC’s share price to 582p – 583p. Our selling price is now showing 582 against your initial purchase of company ABC at 471, the position equates to a rise of 111 pence. You therefore decide to close the bet by selling an amount equal to your initial opening bet, so in this case £1.
Profit/loss on this trade would be calculated as follows:
| Bet per movement | x £1 |
| Profit before deduction of rollover costs: | £111 |
If the market price had fallen and you decided to sell you would have uncured a loss.