The FTSE Daily Futures Contract is based on the most liquid future contract, but is a daily position. So, while the price is calculated to factor in the interest and dividends involved in carrying the underlying until the expiry of the March contract at the momentthe spread is the size of a daily spread, and the position will expire at the end of the day. The spread on the FTSE Rolling Daily is about 40 and the reason it is so wider than the FTSE Rolling Daily is due to factors such as the value of the FTSE index being much greater and it is also a more volatile market.

Yes, but the charges and spreads is a big difference. If all you want is a long term tracker then spread betting the FTSE is unlikely to be the best idea.

- Barclays Stockbrokers

I don't consider that more prudent than active trading with stops and reassessments. Us day traders will step back and review after 20, 50, points. You are going to stick it out and leverage up for FTSE points.

In it took well into the 's to hit the same levels. Not saying we are there now, but there are no certain bets Longer term trading or investing has to take into account inflation. Short term trading doesn't.

I'm still amazed how some people who work in the city still don't understand the ravages of inflation. It is false to assume that spread betting is easy money, better to have clear entry and exit strategy and look into making modest profits perhaps 50 pointsand know when to cash out. Although a direct offset like that holding a FTSE tracker whilst short selling a FTSE spreadbet might not make too much sense - why not just sell a percentage of your FTSE tracker instead?

A Review Of The FTSE /S&P Pairs Trading Strategy | Seeking Alpha

I personally think that spreadbetting can have a place as an investment tool as well as for 'speculation'. You certainly need to be aware of the difference in charges but a lot of it also comes down to mindset.

If you can convince yourself that holding a spreadbet is just another way of buying the shares then you can use it in a more classical investment rather than speculation.

FTSE Trading Strategies

Certainly spreadbet charges are generally higher and you pay interest over time, but there are other counteracting benefits. Imagine you want to sell some shares because you think they are now pricey.

FTSE Trading Strategies

But you've used up your CGT allowance for the year. I personally think that great care is needed with the "mindset" side of using spreadbets, but IF you get that cracked they are a useful additional option to have in your toolkit.

It's worth recapping how dividends are applied to individual share spread bets first. If a company X currently has a mid price ofa the betting binary options expert spread bet may have a mid price of the extra 5 being effectively the interest stock options reported on t4 you pay on the spread bet.

If company Y is also currently at a mid price ofbut is due to yield a 2p dividend during the period covered by the spread bet the spread bet will then be less the 2p dividend i.

It's quite easy to see this factor in play with ftse 100 trading strategies shares - whereas how to calculate nifty option price share will drop by 2p on X-dividend day, the spreadbet will not move. How do we then know that what I've said actually does happen for index bets? Firstly IG Index appear to confirm this in their dealing handbook although I'd stress that if you want to be sure you should confirm directly with you ftse 100 trading strategies betting provider.

Secondly it effectively 'has to be' true. If stock market after bush election day index bets did not include dividends there would be an effective bias that would make shorting the index via spread betting more attractive than longing it. In fact it might even create an arbitrage opportunity to buy the underlying index and receive the dividend whilst simultaneously shorting the index spread bet and gaining advantage of the price falls that result from shares going x-Dividend.

It would probably be a pretty thin arbitrage, but I don't think market forces would allow such an inefficiency to exist. FWIW, though I think generally investors would do well to steer clear of indices because they are much harder to gain any 'edge' on than individual shares - it is easy however to con yourself into thinking you what's what I seem to recall that a large proportion of people who lose whilst spreadbetting do so because they play the indices.

The only rational reasons I can see to 'play' the indices are:. It would be possible to determine how much you would be paying by gaining information from the exchange however companies tend to change their dividends so it would not to easy to predict the amount well in advance but generally within a few days. Your best sources are Reuters, Bloomberg, financial websites and the FT. For instance click here for the direct link to the Reuters feed.

Alternatively, pick up the phone and ring the desk - your spread betting company will have this information. The content of this site is copyright Financial Spread Betting Ltd. Please contact us if you wish to reproduce any of it.

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