Spread Betting: price adjust for dividends

[mik1973]

Does anyone know the precise mechanism SB companies use to adjust prices when a company pays a dividend?
Example- let's say XYZ is currently trading at 400p and is due to pay a dividend of 10p. I know it's not a perfect world but when a company does pay a dividend the price of the share usually falls by around the amount paid.
In the above scenario (although it will never happen) a trader might want to short the share with an SB company "safe in the knowledge" that he will virtually guarantee him/herself a profit of 10p * their point per stake. It would also mean that anyone who goes long a share would immediately be out of pocket by roughly the same amount.

Would appreciate an idiots guide (with an example?) of how this is dealt with.

Cheers
Mick

 

[luckystrike23]

dividends and spread betting

Dividends and Spread Betting
I understand the basics about spread betting, but not how the dividends are covered

 

[mik1973]

Thanks for those links.

Mick

 

[marksmiles]

dividends and spread betting

Dividends and Spread Betting
I understand the basics about spread betting, but not how the dividends are covered

Charges for dividends also apply to index bets. It seems to be true to say that the principle behind this is that when a constituent stock in the index goes ex divi then a payment might be due to someone long the index, and a payment should be taken from someone who is short the index.

How is it possible to check that the correct charges have been applied?
Is this a potential profit making centre for SB companies?