Sports and Financial Spread Betting

There are two distinct types of spread betting; sports and financial. However, the principle of spread betting is the same regardless of the types of markets or bets involved.

The spread betting firms quote a spread on the future prospects of a share or index, or the predicted outcomes of a sporting event. You can then decide as to whether they believe the price will rise or fall.

Here's an example. We will use the market of 'Total Fouls' in a football match. This market is based on the total number of fouls committed by both sides in a game. However, the same principle applies to all spread bets, both sporting and financial.

Example

Match: Manchester United v Chelsea
Quote for the total number of fouls committed which result in a free kick or penalty: 10-11. The spread of 10-11 for this market states that the spread bet firm believes there will be between 10 and 11 fouls committed during this game.

*Buy Example*

Your view is that the intense rivalry between these teams means a lot of fouls will be committed so you decide that there will be more than 11 so you buy £20/point at 11.

Profit: You were right. The final number of fouls was 15, i.e. 4 more than 11, the number of fouls you bought at. You win 4 x £20 = £80.

Loss: You were wrong. The final number of fouls was 8, i.e. 3 less than 11, the number of fouls you bought at. You lose 3 x £20 = £60.

*Sell Example*

You believe there will be less than 11 fouls committed during the game. So, you sell £20/point at 10.

Profit: You were right. The final number of recorded fouls was 8, i.e. 2 less than 10, the number of fouls you sold at. You win 2 x £20 = £40.

Loss: You were wrong. The final number of fouls was 15, i.e. 5 more than 10, the number of fouls you sold at. You lose 5 x £20 = £100.

You will notice that 'buy' transactions are made at the top end of the spread and 'sell' transactions are made at the bottom end.

So there you go - it may seem complex, but Spread Betting is relatively easy to grasp. Good luck!