Spread bets on Wall St.

[Tubbjess]

I’m fairly new to spread betting but I’ve made some bets on the Dow (Wall St on IG) and I have found that the current price on an open position is always about 60 points lower than the current price (sell/offer) quoted. I guess this is something to do with IG’s charges but can someone explain if it is and how it’s calculated?

[Caseynotes]

9 hours ago, Tubbjess said:

I’m fairly new to spread betting but I’ve made some bets on the Dow (Wall St on IG) and I have found that the current price on an open position is always about 60 points lower than the current price (sell/offer) quoted. I guess this is something to do with IG’s charges but can someone explain if it is and how it’s calculated?

hi, not sure what you are referring to, the charge is the spread which on Dow is typically 1.6 points though may widen temporarily for short periods on high volatility, can you screenshot the chart to highlight your point.

[CharlotteIG]

10 hours ago, Tubbjess said:

I’m fairly new to spread betting but I’ve made some bets on the Dow (Wall St on IG) and I have found that the current price on an open position is always about 60 points lower than the current price (sell/offer) quoted. I guess this is something to do with IG’s charges but can someone explain if it is and how it’s calculated?

As @Caseynotes mentioned, our charge is incorporated in the spread. 

The futures contracts we offer are the underlying market price with our spread wrapped around it.

The cash/dfb price you see is the futures contract adjusted for fair value.

The reason people may choose to have the cash/ dfb contract rather than the future is if they're not looking to hold the position for very long. It has a much smaller spread than the future contract. 

Further to this, it may depend on the source you're getting the pricing from. They may be using a different method to price their cash/ dfb price.

I hope this helps  

[Tubbjess]

5 hours ago, CharlotteIG said:

As @Caseynotes mentioned, our charge is incorporated in the spread. 

The futures contracts we offer are the underlying market price with our spread wrapped around it.

The cash/dfb price you see is the futures contract adjusted for fair value.

The reason people may choose to have the cash/ dfb contract rather than the future is if they're not looking to hold the position for very long. It has a much smaller spread than the future contract. 

Further to this, it may depend on the source you're getting the pricing from. They may be using a different method to price their cash/ dfb price.

I hope this helps  

Thanks CharlotteIG, just a couple of queries. I’m not up to speed with your jargon so can you explain your first sentence via an example? Also what are dfb and fair value?

thanks

[CharlotteIG]

Just now, Tubbjess said:

Thanks CharlotteIG, just a couple of queries. I’m not up to speed with your jargon so can you explain your first sentence via an example? Also what are dfb and fair value?

thanks

@Tubbjess- yes of course, sorry about that. 

The futures prices have dividends and interest incorporated in them. So we add interest back into the price and adjust every night with overnight funding (overnight fee with also includes 2.5% admin fee). You can find more information on this by following the link here.

 

As well as this we have to incorporate dividend back on to the price. This is then taken as a dividend adjustment (which we post in the community) but it's simply an adjustment. So if you were long you would see the price spike down but the amount you lose from the movement we will credit to your account. If you were short you would gain from the movement but we would debit your account the same amount.  You can see more about how these work by following the link here.  The video is useful. 

Hope this helps

[Tubbjess]

11 minutes ago, CharlotteIG said:

@Tubbjess- yes of course, sorry about that. 

The futures prices have dividends and interest incorporated in them. So we add interest back into the price and adjust every night with overnight funding (overnight fee with also includes 2.5% admin fee). You can find more information on this by following the link here.

 

As well as this we have to incorporate dividend back on to the price. This is then taken as a dividend adjustment (which we post in the community) but it's simply an adjustment. So if you were long you would see the price spike down but the amount you lose from the movement we will credit to your account. If you were short you would gain from the movement but we would debit your account the same amount.  You can see more about how these work by following the link here.  The video is useful. 

Hope this helps

 

12 minutes ago, CharlotteIG said:

@Tubbjess- yes of course, sorry about that. 

The futures prices have dividends and interest incorporated in them. So we add interest back into the price and adjust every night with overnight funding (overnight fee with also includes 2.5% admin fee). You can find more information on this by following the link here.

 

As well as this we have to incorporate dividend back on to the price. This is then taken as a dividend adjustment (which we post in the community) but it's simply an adjustment. So if you were long you would see the price spike down but the amount you lose from the movement we will credit to your account. If you were short you would gain from the movement but we would debit your account the same amount.  You can see more about how these work by following the link here.  The video is useful. 

Hope this helps

The links were very helpful I can (almost) see clearly now 😊