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Spread bets on stock indexes are the most active spread bets that are traded. They include all the global indices such as the FTSE 100, German Dax, Japanese Nikkei and the three big US indexes, Dow Jones, S&P 500 and the Nasdaq 100.
All stock index spread bets work the same way. The spread better is given a two way price and he or she can effectively bet on the perceived future direction, long or short with an associated stake per point.
A FTSE 100 Spread Bet Example
- A spread betting client may well be bullish on the FTSE 100 and is quoted a price of 4221-4224 for the March contract
- The client then decides to buy £3 a point of the index at the offer price of 4224
- By the close of business the market has rallied up to and now stands at 4267-4271
- The spread betting client decides to take the profit and sells £3 at the bid price of 4267, so realising a profit of 43 points or £129 (43 x £3)
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MAJOR WORLD STOCK INDEXES
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| FTSE 100 - UK |
SMI - Switzerland |
S&P 500 - USA |
| DAX 30 - Germany |
MIB 30 - Italy |
Nasdaq 100 - USA |
| CAC 40 - France |
IBEX 35 - Spain |
Nikkei 225 - Japan |
| Euro Stoxx - European |
Dow Jones - USA |
Hang Seng - Hong Kong |
What Spread Bet Months To Trade?
Spread betting companies are very inventive and therefore will likely offer a few different months to trade the stock indexes. If the date now is the 15th February then on the traditionally quarterly cycle the front month will be the March contract.
But you are also likely to find both a daily and a weekly spread bet market available on the FTSE 100 as well as the other big stock index contracts. So which one to trade? This depends on your timeframe, with generally speaking the shorter your trading timeframe the nearer expiry.
So if you're betting on a quick trade in the FTSE then look towards the daily or weekly spread bet. You will find that the shorter the spread bet expiry date the tighter the bid-offer spread. This therefore makes near expiry spread bets cheaper to trade for short term trades, because the bid-offer spread may be only a point or two wide.
Of course if you decide to trade the daily bet but then want to keep the trade open you would simply instruct your spread bet broker to roll the trade over. But this would incur a cost because of the difference in the bid-offer spread on the roll. So although the shorter expiry dated spread bets like the daily have a tighter bid-offer spread they will become expensive to trade should you wish to hold a trade for a week or so.
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Top stockmarket/Trading Searches
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- Competition is fierce amongst the Spread betting companies
- As the FTSE and other big stock indexes are the most common spreads to trade, bid-offer spreads are often cut to drum up business
- If FTSE 100 is what you want to trade then make sure you check around the different companies to see who offers the best value
- A current list of the different spread bet firms is listed below.
