What's the difference between GBP/USD March 2010 and a GBP/USD rolling spread?

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Nov 19, 2009
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#1
I realise this is going to be a real basic question, but in terms of Spread Betting, what is the differene between a GBP/USD March 2010 market and a GBP/USD Rolling Spread?
 

shadowninja

Well-known member
Jul 22, 2007
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www.helpforheroes.org.uk
#2
I guess the important thing is how long you plan on holding. If you hold until expiry (end of March?) and are charged a tick per day's roll over, that's approx 100 ticks so a wider spread on a March contract might be a better... bet. *honk* OTOH if there's a good chance you'll close in 10 days...
 
Nov 19, 2009
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#4
I'm actually using it as a hedge.... i'm in the UK and am planning to make a deposit somewhere in USD.

I am going to buy GBP/USD to protect my deposit against the USD weakening against GBP.

It's a long term thing - so which is best?
 

Martinghoul

Well-known member
Feb 3, 2009
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#6
One is an FX fwd position, the other one is FX spot... That's the fundamental difference. The technical difference is between the need to roll the spot position (a spreadbetting shop does it on your behalf) vs no rolling for the FX fwd. Every roll transaction gives you your positive or negative carry, but incurs a cost (for instance, IG does the roll by trading out of an existing position at mid, then buying/selling the tom-next fwd at bid/ask + fixed fee of 0.55bp x price). You should check with your S/B shop for the exact details...
 
Nov 19, 2009
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#7
Thanks for all the responses guys. It turns out that with the rolling spread the position is automatically closed and re opened each night, thus you incur the cost of the spread each time. so in the end I went with the March 2010 Spread which suits my needs.