Example 1 -  Placing a bet on the Daily FTSE Up

It is 11am and the FTSE 100 cash is currently down 6.8 points on the day. As the binary ‘Daily FTSE Up’ market will settle at 100 if the FTSE does close Up and at 0 if the FTSE closes Down, the current ‘Daily FTSE Up’ price reflects the negative movement of the underlying market:

Daily FTSE Up: 33 - 36

If you want to Buy the ‘Daily FTSE Up’ market, you buy at 36, if you want to Sell, you sell at 33. The amount you wish to Buy or Sell is your stake. You believe that the FTSE will recover in the afternoon following the open of the US markets and you decide to Buy £5 per point at 36.

Buying the Daily FTSE Up market at 36 means that:

Your maximum profit is (100 – 36) x £5 = £320
Your maximum loss is 36 x £5 = £180

Scenario 1

You leave the bet open during the afternoon and the FTSE 100 cash closes Up 4 points. As the FTSE 100 cash did close up we know that the ‘Daily FTSE Up’ market will settle at 100. So, as you Bought the Daily FTSE Up market you win:

(100 – 36) x £5 = £320 profit.
(Closing Price – Opening price) x Stake

Scenario 2

You close the bet at 3.30pm when the FTSE 100 cash is Up two points. (The FTSE 100 Cash closes Down five points at end of the day). At 3.30pm, as the FTSE 100 cash is Up two points, the binary price is:

Daily FTSE Up: 56 – 59

You believe that the FTSE 100 cash has risen a substantial amount and may fall back, so you decide to close your bet by Selling £5 at 56. Selling £5 at 56 means that you win:

(56 – 36) x £5 = £100 profit
(Closing Price – Opening Price) x Stake

As the FTSE 100 Cash closed down five points at the end of the day, the binary Daily FTSE Up market would have settled at 0. Therefore if you hadn’t closed your bet early, you would have lost:

36 x £5 = £180 loss