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Spread order |
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Spread orderAn order listing the series of options that the customer wants to buy and sell and the desired spread between the premiums paid and received for the options.Spread order Similar MatchesSpread bettingSpread bettingA form of investing which is more akin to betting, and can be applied either to sporting events or to the financial markets. At its core is the maxim 'the more right you are, the more you win'.In the simplest terms, a spread betting firm quotes two figures for, say, the position of the FTSE 100 index at close of trading on a certain day. Its 'spread' is 6005 - 6011.If you think that the FTSE is going to end up higher on the day than 6011, you might buy (go high) at 6011 and choose a stake per point of £5.00 (the 'tick value')If you think that the FTSE is going to end up lower on the day than 6005, you might sell (go low) at 6005 and choose a stake per point of £5.00.If the FTSE actually closes at 6034, and you were a buyer at 6011 you were right by a margin of 23 points, and therefore win £115 which is 23 times your stake. If, however, you were a seller at 6005, you were wrong by 29 points and would lose £145.Spread betting is risky, therefore, because the movement of the underlying index (or share, or football score . . ) can mean you lose a high multiple of your stake. What makes it exciting is that the spreads offered by firms like IG Index, Financial Spreads, City Index and Cantor Index move all the time during the course of the trading day (or during a football match) so:If you are wrong half way through the day you may be able to recover your position by placing another betIf you are right halfway through the day you can lock in your gains by placing another hedge bet.The other feature of spread betting is that there are no brokerage costs, commissions or charges to pay, and gains are tax free. But it is risky! Call spreadCall spreadThe simultaneous purchase (sale) of a call at one exercise price and sale (purchase) of another call at a higher exercise price. Maturity spreadMaturity spreadThe difference in returns between bonds pfof different time lengths. Delta SpreadDelta SpreadA ratio spread that is established as a neutral position by utilizing the deltas of the options involved. The neutral ratio is determined by dividing the delta of the purchased option by the delta of the written option. See also Ratio Spread and Delta. Option spreadOption spreadThe trading of options of the same class at the same time in order to profit from changes in the size of the spread between different options. Further Suggestionsbid offer spreadPrice spread bear call spread Yield spread condor spread Debit spread Spread position bid/offer spread Bid asked spread diagonal spread Relative yield spread Calendar spread crack spread box spread Credit spread Underwriting spread Spread option Spreadsheet Generic credit spread Interdelivery spread Yield spread strategies credit spread Intramarket sector spread Spread income Spread |
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