Spread Betting

This is an increasingly popular way of making a wager on a series of possible outcomes to a given event. Spread betting took off in the financial markets in the 1980s but now you can also wager on other things such as sporting events and election outcomes as well.

The basic idea is that punters are offered a range of numbers, a spread, which may be, for example, of the closing level of a market. If the FTSE-100 opens at 6010, the financial bookmaker may offer a closing bid-offer spread of 6005-6015. If you believed the market was going to fall, you would sell at the bid price. If you believed it was going to rise you would buy at the offer price. If the FTSE-100 closed at 6050, buyers making the minimum £5 per point bet would be £175 better off (35 x £5), while sellers would have lost £225 (45 x £5).

Spread betting is a fast way to make and lose a lot of money. It is very high risk, involves a large element of luck and is only for people who have money they can comfortably afford to lose.

See also, Financial bookmaker .

Last Updated: April 2005 © Moneyextra.com

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