Two week futures spread bet

[betablocker]

Hi,

I'm new to spread betting but I think it might be the best platform for the trade I want to make.

Basically there is a NASDAQ stock that I am convinced will go up by about 10% over the next two weeks and I'm determined to capitalise on it somehow. If I just buy the stock then I'll only make ~10% so I think spread betting might be a better way of doing it.

I don't quite understand how it works having the position open overnight in terms of financing costs however. If its being financed every day does it make it uneconomical to hold a position for a period such as two weeks?

 

[capitalspreads]

beta blocker

most SB companies charge around 2.5% on an annualised basis over base for overnight positions so if you held the position for 14 days it would cost around (2.5+0.25)x14/36000 or about 0.1% of the value of the position...

(base for US is 0.25%)

i.e if you bought £1 a cent of Google at $728.50 you would be buying £72,850 of Google Stock so if you held this for 2 weeks (14 days) it would cost about 72,850*(2.75)*14/36000= £77.91

if the stock did move up 10% (?!) you would 'make' about £7,200 minus your financing.

financing is an important factor in spread betting/cfd trading and should always be factored in but with base rates now at virtually zero it is not as troublesome as it once was

simon

 

[betablocker]

Thank you Simon that's very helpful.

Does the minimum tend to be around £1/ cent?
With the amount of risk I'd be happy with (+ corresponding stop loss) this would make for very little manoeuvrability over two weeks..

 

[capitalspreads]

no the minimum on this type of stock is 20p per cent with capital spreads.. i do not know the minimums with other companies but i am sure that it is available on their web sites

simon