Spread betting examples

In this example, ABC Company is trading at 100/102 (where 100 is the sell price and 102 is the buy price). The spread is 2. Let's assume that you want to open a buy position (go long) at £2 per point because you think the price of ABC Company will go up.

Let's say that our margin rate for ABC Company is 5%, which means that you only have to deposit 5% of the total position's value (position margin) to place your trade. Therefore, in this example, your position margin will be £10.20 (5% x (£2 x 102)).

Remember that if the price moves against you, it is possible to lose more than your outlay of £10.20, as losses will be based on the full value of the position.

In this example the UK 100 is trading at 5789/5790 (sell price/buy price). Let's assume that you think the price of the UK 100 will go up and decide to go long (buy) at £2 per point. The UK 100 has a tier 1 margin rate of 0.25%, which means that you only have to deposit 0.25% of the total position's value as position margin.

Therefore, in this example your position margin will be £28.95 (0.25% x (£2 x 5790)).

In this example, the UK 100 is trading at 5789/5790. You think the price will go down and decide to sell the UK 100 at £2 per point. Remember, prices are always quoted with the sell price on the left and buy price on the right.

The UK 100 has a tier 1 margin rate of 0.25%, which means that you only have to put forward 0.25% of the position's value as position margin. In this example, your position margin will be £28.95 (0.25% x (£2 x 5789)).

Remember that if the price moves against you, it is possible to lose more than your investment of £28.95.

If you hold any position after 5pm New York time, you will be charged a holding cost, or if the position has a fixed expiry the holding cost will be built into the price of the instrument.

We calculate the holding rate applicable to the holding cost based on the interbank lending rate of the currency in which the instrument is denominated. For example, the UK 100 (pound sterling) is based on the London Interbank Offered Rate (Libor). For buy positions, we charge 0.0082% above Libor and for sell positions you receive Libor minus 0.0082%, unless the underlying interbank rate is equal to or less than 0.0082%, in which case sell positions may incur a holding cost.

You can view the historic holding costs, per product, by clicking on the account menu and then the history tab. Learn more about some of the risks of spread betting.