Index spread betting example
Remember, prices are always quoted with the sell price on the left and the buy price on the right
Going long example
You decide you want to do some short term spread betting on the price of the UK 100, which is quoted at 5789.0/ 5789.7. You think the price will go up so you choose to buy at 5789.7.
You decide to buy with a stake of €2 per point.
The UK 100 has a margin requirement of 1%, which means that you only have to put forward 1% of the total position’s value from your own funds as initial margin. In this example your initial margin will be €115.79 (1% x (€2 x 5789.7)). Remember, if price moves against you, it’s possible to lose more than your initial €115.79 margin.
Outcome A: Winning trade
Your prediction was correct and the price rises over the next hour to 5830.0/ 5830.7, so you decide to close your buy bet by selling at 5830.0 (the new sell price).
The price has moved 40.3 points (5830.0 - 5789.7) in your favour. Multiply this by your stake of €2 to calculate your profit, which is €80.60.
Outcome B: Losing trade
Unfortunately, your prediction was wrong and the price of the UK 100 drops over the next hour to 5764.4 / 5765.1, so you decide to cut your losses and sell at 5764.4 (the new sell price) to close the bet.
The price has moved 25.3 points (5789.7 - 5764.4) against you. Multiply this by your stake of €2 to calculate your loss, which is €50.60.
Going short example
You believe that the UK 100 index, which is quoted at 5789.0 / 5789.7 at the time, is likely to go down, so you choose to sell at 5789.0.
You decide to choose a stake of €2 per point.
The UK 100 has a margin requirement of 1%, which means that you only have to put forward 1% of the total position’s value from your own funds as initial margin. In this example your initial margin will be €115.78 (1% x (€2 x 5789.0)). Remember, if price moves against you, it’s possible to lose more than your initial €115.78 margin.
Outcome A: Winning trade
Your prediction was correct and the price goes down over the next hour to 5757.7 / 5758.4, so you decide to close your sell bet by buying at 5758.4 (the new buy price).
The price has moved 30.6 points (5789,0 – 5758.4) in your favour. Multiply this by your stake of €2 to calculate your profit, which is €61.20.
Outcome B: Losing trade
Unfortunately, your prediction was wrong and the price of the UK 100 rises over the next hour to 5799.0 / 5799.7. You feel that the price is probably going to carry on increasing and you don’t want to risk any more of your funds on this position, so you decide to cut your losses and buy at 5799.7 (the new buy price) to close the bet.
The price has moved 10.7 points (5799.7 - 5789.0) against you. Multiply this by your stake of €2 to calculate your loss, which is €21.40.
Overnight financing
If you hold any position open after 17:00 hours New York time you will be charged an overnight financing cost, which is the cost of ‘borrowing’ the value that CMC Markets put towards your position, based on the margin requirement. We calculate the rate applicable to the borrowing cost based on Interbank lending rates. You can view your overnight costs by clicking on the Account icon, then the History tab.