Capital Spreads Rolling Daily Bets

What are Rolling Daily Bets?

Our innovative Rolling Daily Bets provide a cost-effective solution for short-medium term trading. These bets do not expire at the end of the day but are automatically ‘rolled over’ to the next trading day.

Any corresponding orders are also rolled over automatically. An overnight financing rate is applied on a daily basis.

The standard benefits of spread betting still apply, such as the ability to go long or short and tax free profits, as well as other benefits….

Advantages

· Tighter spreads
· Available on indices, equities and FX markets
· Cost-effective solution for short-medium term trading
· Potential payment due to overnight financing
· Automatic order rollover facility
· Familiarity of trading underlying market but with benefits of futures-style trading

Dividend adjustments

The morning after a share goes ex-div the price of the share will drop by approximately the amount of the dividend. Dividend adjustments are credited to long positions and debited from short positions held at the close of business on the day before the ex-dividend date.

If you are long, you will receive 80% of the dividend and if you are short, you will be debited 100% of the dividend.

Payment is credited/debited to your account on the ex-dividend date. Dividend adjustments apply to equity and index bets.

Financing

Rolling Daily Bets incur a charge or income for each day that they are held overnight.

For a position held on a Friday or prior to a Capital Spreads non-business day, financing will be applied according to the number of days until the subsequent Capital Spreads business day.

For example, for a position that is rolled from a Friday to a Monday, financing will be applied for 3 days. Any profits/losses are realised when the bet is closed.

How is the financing calculated?

The overnight financing for a rolling position can be calculated using this formula:

F = [ (Price / U) x Stake x I] / B
F = Overnight Financing
P = Closing price
U = Bet unit risk
S = Stake

I = applicable interest rate:	long bets:	RFR + 2%
	short bets:	RFR – 2 %

B= day basis (365)

Relevant Funding Rate (RFR):

· Shares & Indices: The RFR is generally equivalent to the base rate of the underlying currency of the country of the market concerned. If you are long of a share/index contract, this equates to real market cash exposure and so interest may be charged on this cash value for each day that the position is held open overnight. If you are short of a share/index contract, an interest return may be paid on these equivalent cash funds.

E.g. the RFR for a short rolling daily bet on Google may be based on the US Fed Funds Rate minus 2%.

· Currencies: The RFR is calculated as the funding rate corresponding to the 2nd currency minus the funding rate corresponding to the 1st currency. E.g. the 1st currency of GBP/USD is sterling and the second is the US dollar. Therefore, if USD rates were 2% and GBP rates were 4.75% then the RFR for GPB/USD would be 2% - 4.75% or minus 2.75% (a negative differential)

For example, if the funding rates were as follows:

The RFR of the following currency pairs would therefore be calculated as:.

Note: Remember to add 2% to the RFR for long bets and minus 2% for short bets.

Bet unit risk: The smallest movement on the relevant contract that equates to a profit/loss change that is the same as your stake. E.g. on GBP/USD a movement of 0.0001 in the price would mean a profit /loss shift on your bet of the full stake (bet) amount and so the bet unit risk would be 0.0001.

EXAMPLES

1. Equities

· UK Equities

BUY £10 Rolling Daily Bet – HBOS

A £10 long bet on HBOS which has a closing price of 750.10p would be equal to £7,501 market exposure (this equates your bet to the number of shares you would have to buy from your stockbroker to create the same market risk, a £10 bet = 1000 UK shares).

(750.10 / 1) x 10 x 6.75% = £506.32

This is the annual cost of borrowing £7,501 at 6.75%.

Divide this by 365 to reach the daily charge:
£506.32 / 365 = £1.39

As you are long of an equity, your account would be debited this amount for the overnight funding.

· US Equities

BUY £10 Rolling Daily – Microsoft

[ (26.49 / 0.01) x 10 x 4% ] / 365 = £2.90

Your account would be debited £2.90 for the overnight financing.

2. Indices

· UK Indices

SELL £10 Rolling Daily - FTSE Cash

[ (4722 / 1) x 10 x 2.75% ] / 365 = £3.56

Your account would be credited £3.56 as overnight financing.

· US Indices

LONG £1 Rolling Daily – Wall Street Cash

(10350 / 1) x 1 x 4% = £1.14

You are charged £1.13 for holding this position overnight.

3. Currencies

· LONG £10 Rolling Daily GBP/USD

[ (1.8550 / 0.0001) x 10 x – 0.75% ] / 365= –3.81

Your account would be credited £3.81 as overnight financing.

Normally, for a buy bet you would be charged the overnight financing but because this calculation has returned a negative number, you will actually receive this amount.

· SHORT £5 Rolling Daily GBP/USD

[ (1.8550 / 0.0001) x 5 x –4.75% ] / 365 = –12.07

Your account would be debited £12.07 as overnight financing.

Please note that as with the previous example of a long bet, this has returned a negative number but in this case, as this is a sell bet, instead of you receiving the money you will be paying it!

The rates used for the examples above are indicative and are not necessarily representative of correct rates.