Futures and spreadbetting.

irishneil

Junior member
39 0
Assuming that spread betting charts are going to be delayed on indices as they are attached to the futures market.

Surely it would be possible to use the futures market to predict (including a time delay) where the spread betting market may go, admittedly this may only be slightly advantage) but for traders who swing trade indices this could be there thing?
 

MORRIS2001

Member
74 7
Assuming that spread betting charts are going to be delayed on indices as they are attached to the futures market.

Surely it would be possible to use the futures market to predict (including a time delay) where the spread betting market may go, admittedly this may only be slightly advantage) but for traders who swing trade indices this could be there thing?


The key lies in the history of the SB instrument. When the first firms were offering spread bets on the FTSE there were some interesting issues: You had to create your market around a real market, so this meant using the near quarter ET future but at the same time your average customer did not know what a future was and nearly everyone took their pricing from the FTSE index, not the future.

The problem was how to create a synthetic that looked like the FTSE Index but tracked the futures for hedging purposes (and obviously to prevent arb).

The solution was to take the NQ future and remove the remaining implicit interest element while at the same time, adding back in the constituent divs for the period. This gave you the cash equivalent but tracking in line with the real market.

As such, it is fair to assume, that price deviation of the OTC cash instrument from the real future (once interest and income is factored in) is an internal issue within the bookmaker relating to exposure or desired exposure. This being almost impossible to predict.
 
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