Excerpt from: Understanding Spread Betting
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| January 24, 2007 | | Spread betting on various situations |
Some indexation companies offer performance spreads on situations that are not always cut and dry. Incademy.com offers a look at an example of how placing a spread bet on performance spreads might work:
Take, for instance, the London Stock Exchange's merger negotiations
in 2000 with various other exchanges. There was lots of speculation
about who the LSE would eventually end up with, and people wanted to
bet on it. So indexation companies created an artificial point system
to represent the possible outcomes. Under this system whichever
company was successful in merging with or taking over the LSE got 50
points. If there were two partners, they each got 25 points. Failed
bidders got no points. Having established the point system, the indexation company then offered its spreads on the bidders: - 10-12 points for Deutsche Borse
- 12-14 points for Euronext
- 12-14 points for Nasdaq
- 7-9 points for OM Gruppen
- 4-6 points for the Field
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