subject: How to Profit from Financial Spread Betting [print this page] I don't know why people don't do spreadbetting. The major upside is no Capital Gains Tax and you can use leverage / shorting if you like (It's a bet not a holding). Major downside is you don't have shareholder rights. I hold some shares in ISA. The majority of my money is on spreadbets though. They give wide market access and you can get most tickers. Good free charting, and most of the spread betting providers are large enough to be resilient. I use Capital Spreads and IG index.
Let's take a case involving Dragon Oil stock; a typical quote for a future maybe -:
DGO cash 442.89 - 445.86
Sept exp 444.32 - 450.45
With IG Index you can do a spreadbet against a certain expiry option on a share. I normally pick the furthest away expiry - on DGO this is September expiry. There is no roll over cost each night. The only real cost is that the spread is a few points wider than a shares spread, or a day cash price spread.
When expiry comes around you can either close it and open a new one yourself, or you can ring them and 'roll it over' to the next expiry period. The cost for this is half the spread on the next period. They are mostly quarterly expiry periods.
You don't get dividends on future spread betting (although these are still discounted in the bet price). For rolling dailies you do get the benefit of dividends. When I started I was surprised but occasionally I used to get deposits from somewhere and it turns out these are dividends. With Dragon Oil stock it makes no difference currently, but if they were to pay a dividend I think I'd get it on my spreadbet position.
Forgot to say I don't work these people. A plus for spreadbets is that there is no fee per trade deal, so you can do as many as you like (but there is still a small buy sell spread). And remember there is only one rule for spread betting: do not gamble more than you can afford to lose, unless of course its Dragon Oil stock then buy as much as you bloody well can while stocks last! [joke]
