Example 2 - Placing a bet on the Handicap Daily FTSE Up > 20

It is 9.20am and the FTSE 100 cash is currently Up 30 points on the day. As the binary ‘Daily FTSE Up > 20’ market will settle at 100 if the FTSE does close Up > 20 and at 0 if the FTSE closes Up < 20 points (or down), the current ‘Daily FTSE Up > 20’ price reflects the positive movement of the underlying market:

Daily FTSE Up > 20: 60 – 65

If you want to Buy the ‘Daily FTSE Up > 20’ market, you buy at 65, if you want to sell, you sell at 60. The amount you wish to buy or sell is your stake. You believe that the FTSE will fall in the afternoon following the open of the US markets and you decide to sell £10 per point at 60. Selling the Daily FTSE Up > 20 market at 60 means that:

Your maximum profit is 60 x £10 =£600
Your maximum loss is (100 – 60) x £10 =£400

Scenario 1

You leave the bet open during the afternoon and the FTSE 100 cash closes Up 18 points. As the FTSE 100 cash did close up < 20 points we know that the ‘Daily FTSE Up > 20’ market will settle at 0. So, as you sold the Daily FTSE Up market you win:

60 x £10 = £600 profit
Opening Price x Stake

Scenario 2

You close the bet at 3.30pm when the FTSE 100 cash is Up 15 points. (The FTSE 100 Cash closes Up 35 points at end of the day). At 3.30pm, as the FTSE 100 cash is Up 15 points, the binary price is:

Daily FTSE Up > 20: 33 – 37

You believe that the FTSE 100 cash has fallen a substantial amount and may fall back, so you decide to close your bet by Buying £10 at 37. Buying £10 at 37 means that you win:

(60 – 37) x £10 = £230 profit
(Closing Price – Opening Price) x stake

As the FTSE 100 Cash closed up 35 points at the end of the day, the binary Daily FTSE Up > 20 points market would have settled at 100. Therefore if you hadn’t closed your bet early, you would have lost:

(100 – 60) x £10 = £400 loss
(Closing Price – Opening Price) x stake