The variety of bets that can be placed on the financial markets is wide and widening all the time. Apart from individual equities and indices, you can also bet on:
A bet based upon the performance of a particular market sector - such as telecoms or financials.
A market revolving around the total number of shares which rise on a given day (winners) and the total number which fall on a given day (losers). These sorts of spreads are usually based on stocks within one index.
These are basically pre-float spread bets. Most IPOs do not have a retail tranche, so individual investors are excluded from buying at the most competitive prices. However, spread betting companies provide a solution by creating pre-IPO markets - known as grey markets. Basically, after researching the company about to float they create a market based upon what it thinks the closing share price will be at the end of the first day of trading. Retail investors can then either buy or sell the spread depending on their own view of whether the company's shares will perform better or worse than the spread suggests.
The spread market in foreign exchange allows investors to bet on the exchange rate between two currencies. An indexation company might quote a spread of 1.4550 - 1.4590 dollars to the pound. If you think sterling is going to rise, you buy at 1.4590 and hope the spread rises.
Spread betting companies create markets in agricultural commodities (wheat, grain, cocoa, pork bellies, orange juice), industrial commodities like oil and gas, and metals. Prices can be very volatile which means there is big profit and loss potential. In the States there is a large community of private commodity traders and plenty of "how to" literature. But for the average private investor with no special experience, this is another "no-go" area.
These markets work in exactly the same way as normal options markets. Many retail investors run a mile at the word "option" - just think Nick Leeson. But the principle is fairly simple. However spread betting through options is not for the beginner.
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