Spread betting definition
Spread betting is a leveraged financial derivative. When spread betting, you are making a bet on the direction in which a market will move. The accuracy of your bet determines the profit or loss when the position is closed.
When opening a spread betting position, you decide how much you would like to bet for each point of movement in an asset. Buy positions return a profit if the market increases in price, sell positions return a profit if it drops in price. The profit or loss at the close of the trade is calculated as:
Profit or loss = (£ bet per point x points moved) - charges to open and maintain position
Spread betting is a leveraged product, meaning you only need to put down a fraction of the full value of the trade in order to open a position. The margin required depends on the market being traded and size of the bet.