Daily Future and Daily Cash

[neilmc]

Hi,
I've started reading The Spread Betting Handbook by Malcomn Pryor. (Not that far into it yet) And I setup a virtual account on TradIndex.com this evening. Could someone please explain to me the diference between Daily Future bets and Daily Cash bets.

Is the Daily Future a Rolling Daily bet?
And a Daily Cash bets closes at the end of day?
A Weekly Future Close at the end of the week?

Or am I totaly off track?

How come the buy and sell prices of the above two are different?

If someone could help me out and keep it simple That would be great.

Thanks

Neil

 

[grantx]

Neil,

In the simplest terms, assume interest rates are 10% and if you have £100 in Cash. In one year’s time (the Future) your cash will be worth £110.

Formally, to calculate the fair value of the future from the cash, the calculation (in Excel) would be:

=Cash index *EXP((interest)*(days/365)).

To calculate the Cash from the future:

=Future index/EXP((interest)*(days/365)).

Can’t help with the other questions, I’m afraid.

Grant.