option value clarification

[ppp8]

Can anyone explain the total value of an option contract in spread bets? What is the contract size?

Support page says:

FTSE, bet size £10, minimum bet £2. But what is the contract size, 100?

Does it mean that if I buy a call priced £95 with minimum bet of 2, does ultimate value equal 95*2*100?=£19000 ? Does not seem right.

I need to know the maximum possible loss on a purchased option. Info tab does not say contract size. In support, minimum bet on FTSE is £2, in ticket window £0.5. Does not much. 

Please provide clear guidance. 

Thank you

[Ian_944]

There's no contract size, just a bet size in pounds.

Simple example: buy a call trading 5.50 for £10. It finished out of the money and is worth zero. You lose £55. 

[ppp8]

Thanks Ian, this makes more logic. Formula is then, current price * bet size = maximum loss.

I found different explanation on the forum that confused me. But it must have been for CFDs 

[AndaIG]

Hi @Ian_944  @ppp8

Spread Betting: 

Total premium paid = Bet size x option price

CFD:

Total premium paid = No of contracts x value per contract x option price

FTSE contract size: 1 contract = 10GBP/ point

When buying options the maximum loss is always equal to the premium paid, hope this helps.  

All the best 

Anda

 

[ppp8]

Thank you Anda, I trade regular equity options on daily basis, just could not get my head round how it works in spreads. Seemed too simple  

All best

[HeOfMuchDisgrunt]

20 hours ago, ppp8 said:

Thank you Anda, I trade regular equity options on daily basis, just could not get my head round how it works in spreads. Seemed too simple  

All best

Who do you trade with? Few seem to quote on-line prices. People have been on at IG for years to do it.