T2W Trading Community

Rolling Trades:

Rolling bets mirror that of the underlying share price. Where as other trades tend to mirror that of the futures market. The price has a small spread built in which is usually much smaller than that of the daily and quarterly trades. Rolling bets are usually available on most of the common trades, mostly in the FTSE100, NASDAQ 100 and the DOW 30.

A rolling share bet is a daily bet that is automatically rolled over the next trading day. The trade is closed at 4.30pm (UK time) for UK trades and 9pm for US trades and automatically re-opened at the market opening the next day. This will continue until you either close the trade yourself or you run out of margin.

Time for an example:

You get a quote on stock XYZ at 345.7 / 346.8

Now this time you believe that the stock is going to fall so you go short and sell stock XYZ at 345.7 @ £10 per point on a Rolling bet.

In the place of a normal spread in this sell example, you will be paid interest for every day that you hold a position open.

The interest payable by the bookmaker varies but is around the following equation:  (LIBOR 1 month – 2%)/365.

LIBOR is the current standard base interest rate. Multiply by the total underlying value of your position.

Using our current example we have the following equation applied to our trade:

((5% -2%)/365) x (£10 x 345.70)
= 0.0082% x 345.7p = 28p of interest paid to you daily.

However, if you held a long position instead, then you would of course pay interest to the FB. The rate for this is around (LIBOR 1 month + 1%)/365 per day. Rates can be found in the FB’s users’ manual. The rates will favour the FBs so that for the equivalent long and short position they will deduct more on the long than they add on the short.

Now it’s 4.30 on and market closes at 351 at the mid price. The stock didn’t fall as you anticipated and your current loss on your trading account is worked out as follows:
(£53 (351 – 345.7) x £10)

So in essence on that day of trading you have lost £53.00

The trade is automatically re-opened the next day at 351, with you trading short at £10.00 per point.

Now say the stock falls to the mid price at close of this new trading day to 337.5 the profit you would make would be approximately £135.00 depending on the true mid price at close.

Rolling bets do have some advantages; namely smaller spreads. There is a premium to be paid in interest of course if you are making that trade, which sometimes equals more than the spread on a standard trade on quarterly and daily trades. Again it’s down to choice. I have students that only trade rolling and those that do both or just quarterly trades.