Individual Share Betting Over the last few months you have seen the price of XYZ Company fall rapidly from £4 per share to £3 and you believe this would be a good price to buy (to go long of the shares) for a number of reasons. You ring your bookmaker or bookrunner and if we take today as being January 1st, ask for the price in the 'March expiry' XYZ share. Remember, check the actual expiry date and time. For this example we will use March 1st at 11am. The quote is 318-321 pence. Here it is important to understand that this price will normally be at a premium (higher) than today's price to reflect any dividends due to the underlying share and the 'time value' of the bet. (Actually the 'time value' represents the possibility of how the share price might change over the period to expiry - called the 'volatility', and also that £1 today is worth more than £1 in e.g. 3-months time because of the interest that could have been earned on deposit in a bank over that period.) In this case the bet has almost 2 full months to run and you feel the price will rise above this level within this time period. So you buy say £5 a point (for every penny XYZ moves) which means you pay the higher (offered price) and go long (buy) at 321. Remember the price of XYZ Company is "live" and at any time during its tradable day you may check the price and trade if you want to. Bookmakers/bookrunners will trade in a particular bet during their published hours. Point to Note As the bet stands you are liable for an unknown amount of losses if the share continues to fall. You may decide that you only wish to lose a certain maximum amount of money so you can protect your bet by taking out a guaranteed stop-loss. For this service the bookmaker or bookrunner will charge you an extra premium (fee) but you have the comfort of knowing your worst-case scenario. If the price falls to your guaranteed stop-level you will be automatically stopped out and your positions squared out. Most types of spread bets can be protected by a guaranteed stop-loss and the size of the premium charged will depend on the length of the contract in time, the underlying cost and volatility of the instrument involved. So back to the example: Mr A buys £5 at 321 with no guaranteed stop-loss. Result 1 In approximately 1 month, February 1st, Mr A reviews his position. Shares of XYZ Company are 335 due to a strong rebound in the market. Mr A decides to take the profit. Profit   Mr A is long at 321 Price of XYZ on Feb 1st 335   Difference +14 Result +14 x £5 stake = £70 profit     Result 2 In approximately 1 month, February 1st, Mr A reviews his position. Shares of XYZ are 290 due to a poor market. Mr A decides to take his loss. Loss   Mr A is long at 321 Price of XYZ on Feb 1st 290   Difference -31 Result -31 x £5 stake = £155 loss     Result 3 Mr A runs the bet until expiry on March 1st. The price of XYZ Company is now 350. Profit   Mr A is long at 321 Price of XYZ on Mar 1st 350   Difference +19 Result +19 x £5 stake = £95 profit      Result 4 Mr A runs the bet until expiry on March 1st. The price of XYZ Company is now 285. Profit   Mr A is long at 321 Price of XYZ on Mar 1st 285   Difference -36 Result -36 x £5 stake = £180 loss     Copyright 2000 everythingexplained.com for  spreadbettingexplained.com