Daily Future and Daily Cash

[neilmc]

Hi,
I've started reading The Spread Betting Handbook by Malcomn Pryor. (Not that far into it yet) And I setup a virtual account on TradIndex.com this evening. Could someone please explain to me the diference between Daily Future bets and Daily Cash bets.

Is the Daily Future a Rolling Daily bet?
And a Daily Cash bets closes at the end of day?
A Weekly Future Close at the end of the week?

Or am I totaly off track?

How come the buy and sell prices of the above two are different?

If someone could help me out and keep it simple 🙂 That would be great.

Thanks

Neil

 

[grantx]

Neil,

In the simplest terms, assume interest rates are 10% and if you have £100 in Cash. In one year’s time (the Future) your cash will be worth £110.

Formally, to calculate the fair value of the future from the cash, the calculation (in Excel) would be:

=Cash index *EXP((interest)*(days/365)).

To calculate the Cash from the future:

=Future index/EXP((interest)*(days/365)).

Can’t help with the other questions, I’m afraid.

Grant.