Hi Anna. For financial spread betting, if I choose to let my daily market bet roll over to the next day, will I incur any cost other than the “relative funding rate”, even if the stock price is unchanged? What I am worried about is that I will also be charged for half the spread. Example: say the stock quote is 100 – 105 and I choose to buy at 105. If the stock price doesn’t change at the end of the day (and I let it rollover) then will I also be charged the 2.5 points between the mid price and buy price? Hope this makes sense! Thanks, Mark
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Hi Mark
Many thanks for your question on spread betting and the relative funding rate, which can be confusing, but as far as I am aware, the only charge on a rollover bet is the RFR. The RFR is calculated using the following formula and the key point to note is that this is calculated using the closing price.
F = { (P/U) x S x I }/B – below are the terms explained
F = The overnight finance for the rolling daily contract
P = The closing price of the contract
U = The bet unit risk ( for UK equities this is 1)
S = Your stake
I = Applicable interest rate ( long trade: RFR +2% and short trades: RFR – 2% – we have assumed 2% in this case but this may vary from from one financial spread betting company to another)
B = Day basis ( 365 days )
As you can see the formula uses the closing price of P, so if the stock closed at 105, then this would be the figure used. Some trades will charge you interest and others will pay you interest. As I say I have never come across any other charges, however if you would like to send me details of your spread betting company I would be more than happy to investigate further for you. I hope this helps and many thanks for your question which I’m sure others will also find helpful. Good luck with your trading and spread betting – all best wishes – Anna