Spread betting is a derivatives product that allows you to trade on the price movements of thousands of financial markets including indices, shares, currencies, commodities and more.
You can use spread bets to speculate on price movements irrespective of whether the markets are rising or falling. If you go long (buy), your profits will rise in line with any increase in that price. If you go short (sell), your profits will rise in line with any fall. Similarly, if you go long on the price and the underlying stock price falls, you will incur losses. See an example of how you can spread bet with City Index.
Spread betting is a margined product that only requires you to deposit a small percentage of the full value of your position. This means that the potential for profits, or losses, from an initial capital outlay is significantly higher than in traditional trading. The margin required is typically between 1% and 10% of the total value of your position, depending on the market. At City Index, we offer prices on over 12,000 spread betting markets. See our Range of Markets section for more information.
Find out how you could start spread betting with City Index.
What is a Spread?
Just like other forms of trading, including traditional share dealing, we quote two prices for all our spread bets – a buy price (the price at which you can go long if you expect the underlying market to rise) and a sell price (the price at which you can go short if you expect the underlying market price to fall). The difference between the ‘buy’ price and ‘sell’ price is known as the spread.
We quote tight spreads across all our markets, enabling you to maximise your profits, irrespective of whether the markets are rising or falling. We offer some of the tightest spreads in the industry, with 1-point spreads on the UK 100, Wall Street, Germany 30 and France 40. 1-point spreads are available during our market hours only. Spreads lowered on our rolling and daily future spread bet markets. Includes rolling, daily future spread bets and CFDs (excluding CFDs futures).
What is a Rolling Spread Bet?
Rolling spread bets are 'rolled' each day. This means that each position is closed and then automatically reopened at the same level the following trading day, subject to sufficient trading resources being available in your account to continue supporting the position.
Profit and loss are realised when positions are closed. Daily financing charges or credits are associated with any rolling bet position which is open at our market close. Find out more about our Financing and Charges.
Rolling spread bets are also subject to dividend adjustments. If a dividend payment is made to any underlying equities that relate to your open position rolling spread bets, we will make an ex-dividend adjustment to those related rolling spread bets held by you. For long positions, adjustments will be credit to your account. Adjustments will be debited to your account for short positions.
Indices Rolling Bet Example
Let's say our current Wall Street Rolling Bet spread is 10790/10791 (sell price/buy price).
You expect the Wall Street Index to rally over the coming days and therefore open a buy position (go long) of £10 per point at 10791.
Over the next few days the Wall Street Index rallies following the release of some positive US economic data. Our latest Wall Street rolling spread bet price is now 10807/10808. Having reached a comfortable level of profit, you decide to cash in your gains by selling £10 per point at 10807 (our sell price).
Result: You bought at 10791 and sold at 10807, which represents a 16-point movement in your favour which, at your stake size of £10 per point, nets you a tax-free profit* of £160 (10807 – 10791 x £10).
Alternative scenario: If however, the price of the Wall Street Index had fallen to 10765, you would have lost £260 (10791 - 10765 x £10).
See a detailed example of how you can spread bet indices with City Index.
