Two week futures spread bet

betablocker

Newbie
2 0
Hi,

I'm new to spread betting but I think it might be the best platform for the trade I want to make.

Basically there is a NASDAQ stock that I am convinced will go up by about 10% over the next two weeks and I'm determined to capitalise on it somehow. If I just buy the stock then I'll only make ~10% so I think spread betting might be a better way of doing it.

I don't quite understand how it works having the position open overnight in terms of financing costs however. If its being financed every day does it make it uneconomical to hold a position for a period such as two weeks?
 

capitalspreads

Experienced member
1,452 79
beta blocker

most SB companies charge around 2.5% on an annualised basis over base for overnight positions so if you held the position for 14 days it would cost around (2.5+0.25)x14/36000 or about 0.1% of the value of the position...

(base for US is 0.25%)

i.e if you bought £1 a cent of Google at $728.50 you would be buying £72,850 of Google Stock so if you held this for 2 weeks (14 days) it would cost about 72,850*(2.75)*14/36000= £77.91

if the stock did move up 10% (?!) you would 'make' about £7,200 minus your financing.

financing is an important factor in spread betting/cfd trading and should always be factored in but with base rates now at virtually zero it is not as troublesome as it once was

simon
 

betablocker

Newbie
2 0
Thank you Simon that's very helpful.

Does the minimum tend to be around £1/ cent?
With the amount of risk I'd be happy with (+ corresponding stop loss) this would make for very little manoeuvrability over two weeks..
 

capitalspreads

Experienced member
1,452 79
no the minimum on this type of stock is 20p per cent with capital spreads.. i do not know the minimums with other companies but i am sure that it is available on their web sites

simon
 
 
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