Spread betting

A way of betting on the outcome of movements in the financial markets. Like bookmakers at the races, specialist firms accept bets on the movement up or down over a period of a stock index or an individual share. The profit or loss is calculated on the basis of the number of “points” between the price at the outcome and what it was when the punter made the original bet.
Take XYZ company, which is quoted at a spread of, say, 863–870 pence. If you think the price is going to fall, you would take out a “down” bet for, say, £15 at 863 pence, the lower of the two prices quoted, over a period of, say, two weeks. If at the end of the period the spread quoted has fallen to 830–837 pence, you would buy back your original down bet at 837 pence, making a profit of £390 (863  837  26, then 26  £15  £390). Conversely, if the spread quoted had risen to 880–893 pence, you would lose a corresponding amount (863  880  17, then 17  £15  £255).
Spread betting is risky because, unless you cap your liability by taking out an equal and opposite bet or otherwise minimise your exposure, you are liable for the full extent of your losses should the price fall. Although spread betting in financial markets began only in the 1970s, it has long been popular with followers of sport. Today it is possible to gamble in the same way on the outcome of, say, a cricket match by taking an up or down bet on the number of runs a particular side will score and many of you would be knowing the pakistani scandal in cricket . A boon for country's residents is that profits from all such transactions are free of capital gains tax and stamp duty.