Introduction to Spread Betting

While with fixed odds betting you’re betting on a final result, with spread betting you’re betting on the margin of victory. A spread price works more like share prices, in that the price will fluctuate throughout the event and you can choose buy or sell.

For example, rather than betting on Chelsea to win the premiership you bet on the number of points they will get. The price might be 88 points. If you think they will get more you ‘buy’ Chelsea points. If you think they will get less then you ‘sell’ Chelsea points. You will then win or lose the difference between the price you bought/sold at and their final points total, multiplied by your stake.

Like share prices, the buy and sell prices won’t be exactly the same. If the real price is 88, those buying will buy at 89 and those selling at 87. The price will be shown as Chelsea season points 87-89. The spread between 87-89 is know as ‘the margin’.

For example,

You expect Tottenham to do well this season. Their season points price is 57.5-59 so you buy at 59 for £20 a point. If, at the end of the season Tottenham finish on 70 points, you win (70-59) x £20 giving a profit of £220.

If you expected them to do badly you’d sell at 57.5. So if they finished on 70 points you’d have a loss of (70 - 57.5) x £20 giving a loss of £250.

That’s an example of a long term bet but you can spread bet on individual matches too.

For example,

Arsenal / Man City 0.9 - 1.1

Arsenal are playing Manchester City. Arsenal are favourites and expected to win by between 0.9 and 1.1 goals. If you want to back Arsenal you will buy at 1.1. If you want to back Man City, you will sell at 0.9.

If Arsenal win by 3 goals:

The profit to a buyer would be 1.9 (3 - 1.1) x the stake
The loss to a seller would be 2.1 (3 - 0.9) x the stake

If Man City win by one goal

The loss to a buyer would be 2.1 (1 + 1.1) x the stake
The profit to a seller would be 1.9 (1 + 0.9) x the stake

The predicted margin of victory on a bet like this is known as the ‘supremacy’.

As shown in the above example a quote isn’t always a whole number. In match bets the quote if often a fraction. For example a fraction of a goal for a football match or fraction of a shot for a golf match bet.

In-Running

Another difference between spread betting and fixed odds betting is the greater opportunity to bet ‘in-running’. During the course of an event the price will change many times, particularly during a long term competition like the football season. This gives the opportunity to take profits and cut loses on existing bets.

Taking a Profit

Taking the earlier example of buying Tottenham season points at 59 for £20 a point, if Tottenham started the season well their points spread would rise. Say after a few weeks it had moved to 62.5-64, you could "Close" the bet and take a profit.

Eg. Your initial bet was a buy at £20 a point at 59. By closing the bet, you are effectively selling at 62.5, talking a profit of the difference between your two bets (62.5-59) x £20 giving a profit of £70.

Bet 1 buy at 59 for £20, final result example 70 points, profit of £220

Bet 2 sell at 62.5 for £20, final result example 70 points, loss £150

Over all profit of £70

Spread betting sites have the option to "Close" the bet at the click of a button (rather than actually having to place the opposing bet). This can be done in your Open Bets section. Once the bet is closed any profit or loss will be credited immediately (you do not have to wait for the event to finish).

Cutting Loses

Cricket Example - Say you buy England runs £1 a run when the price is 320-340.

After a poor start for England the price drops down to 220-240, you decide England are likely to do even worse and you cut your loses. You sell at 220 giving you a loss of 120 (340-220). Whatever the final outcome you will have a loss of £120.

England actually finish on 180 runs, so you were right to close the bet early -

The two bets above cancel out, giving a loss of £120 whatever the final outcome.

If you had not closed the bet early, you would simply have lost the £160 from your initial bet.

Index bets

Indices are generally used for long term markets like Wimbledon or Big Brother Reality Show. They work by allocating points based on performance.

For example a Wimbledon 100 Index might award 100 points to the winner, 75 to the runner up, 50 for losing semi-finalists, 33 to losing quarter finalists etc

At the start of the event all the people playing will be given a price. For example Henman might be 38-40.

If he loses in the semi-finals, he will have 50 points -
buyers make profit of 10 (50-40) times their stake
sellers a loss of 12 (50-38) times their stake.

The prices in index markets will change as the tournament progresses giving plenty of opportunity for closing bets during the event.

Be Careful!

As you’ve probably gathered, profits and losses on a single bet can be quite large relative to the stake so make sure you’ve fully understood each bet before selecting your stake. It’s a good idea to work out a best and worse case senario and what the profit/loss on that result would be.