Two questions about SB

[4XTrigger]

Dear Traders

Would you be kind enough to answer my following questions about Spread Betting since I am new on this field?

First: Is Spread Betting like exotic options i.e. bet value is same like premium paid in options? And what you lose if your bet is wrong is only that paid value??

Second: On what base the Betting value is calculated??

Thank you in advance for your assistance and support.

Regards

 

[lucas_king]

No, SB is much different from options. The spread is the difference between the buy and sell price, so the added spread is the ‘commission’ that the broker takes. Let’s say you go £10 per point. For each point it goes up you make £10, each point it goes down you lose £10. So, if the price is 6500 and you’re long, the max you could lose is £65000 (if the price goes to 0). So no, loss isn’t limited to a ‘premium’, like with options.

Second question – not 100% clear what you mean here, but if by ‘betting value’ you mean the price, it’s based on an underlying asset, such as a share or commodity.

 

[plugger]

You may be confusing Spread betting with Binary Options where your loss is limited to your bet size.
UK clients tend to use spread betting as a form of trading an underlying index, share or currency with favorable tax treatment. In Australia and Asia traders use CFD's for leveraged exposure to these underlying instruments.