6 ms·

Yes, specifically spread betting, which is illegal in the US, but more common overseas I believe, because it basically is pure gambling. The other variations th

Yes, specifically spread betting, which is illegal in the US, but more common overseas I believe, because it basically is pure gambling. The other variations that are legal in the US are futures and options, with the latter being the most similar to spread betting I think. Futures is a market to reduce risk for commodities producers. Options are higher risk I want to say? Search around Investodpedia for better explanations; really good site that one. EDIT: or maybe the spread referred to in the article is on the options market. I'll have to reread.

lordnacho 8y ago
Betting on a spread is not spread betting. You can but Coke and sell Pepsi, you then have a position in the spread. That's not spread betting, which is just a retail way to gamble on a price movement. You cannot say options are more risky than futures, the two are related but different in nature. Whether he implemented his trade in the options or futures is irrelevant, there was always going to be a blowout risk. Source: I'm an ex options and futures trader.
- RandomInteger4 8y ago
  Thank you for the correction.
- hippich 8y ago
  why ex? i.e. why you stopped? (i am learning about options trading right now)
  - lordnacho 8y ago
    Moved around to other financial business, mainly quantitative trading.
3rdAccount 8y ago
No, this is pretty much how coordinated transaction scheduling works with several of the power markets in the US like NYISO & PJM. You put in a transfer you want based on a certain spread between each market's price.
- RandomInteger4 8y ago
  Thank you for the correction.
ThrustVectoring 8y ago
Risk levels are determined by two factors: how risky the asset is, and how much cash you have collateralizing the position. Options in general are a way to transfer specific tranches of risk. There's lower and higher risk strategies - eg, if you do a "covered call" you're buying a stock and selling off the upside risk for cash today, and basically wind up with a less risky strategy than owning the underlying outright. Futures are a specific market - forward contracts to purchase (long) or deliver (short) a specific product in a specific manner at a specified date, marked-to-market daily. The mark-to-market is important: if you're long a soybeans future and the price of it goes down, they debit your account the cash value of the price decrease and credit your counterparty's. This is why there are margin requirements: they're designed so that when a nightly debit happens, you will almost always have enough cash. The spread is referring to the futures market. If you have offsetting positions, then many events that earn you money on one contract will lose you money on the other (and vice versa). Eg, if you are long two 2-year treasury future and short a 10-year treasury future, and interest rates for both rise 0.01%, then as of the last market close your 2-year futures lose $71.54 and the 10-year future gains $70.98. The market rules recognize that the spread is less risky than the outright, and thus requires less margin to guarantee your trades.

lordnacho 8y ago

Betting on a spread is not spread betting. You can but Coke and sell Pepsi, you then have a position in the spread. That's not spread betting, which is just a retail way to gamble on a price movement. You cannot say options are more risky than futures, the two are related but different in nature. Whether he implemented his trade in the options or futures is irrelevant, there was always going to be a blowout risk. Source: I'm an ex options and futures trader.

RandomInteger4 8y ago
Thank you for the correction.
hippich 8y ago
why ex? i.e. why you stopped? (i am learning about options trading right now)
- lordnacho 8y ago
  Moved around to other financial business, mainly quantitative trading.

3rdAccount 8y ago

No, this is pretty much how coordinated transaction scheduling works with several of the power markets in the US like NYISO & PJM. You put in a transfer you want based on a certain spread between each market's price.

RandomInteger4 8y ago
Thank you for the correction.

ThrustVectoring 8y ago

Risk levels are determined by two factors: how risky the asset is, and how much cash you have collateralizing the position. Options in general are a way to transfer specific tranches of risk. There's lower and higher risk strategies - eg, if you do a "covered call" you're buying a stock and selling off the upside risk for cash today, and basically wind up with a less risky strategy than owning the underlying outright. Futures are a specific market - forward contracts to purchase (long) or deliver (short) a specific product in a specific manner at a specified date, marked-to-market daily. The mark-to-market is important: if you're long a soybeans future and the price of it goes down, they debit your account the cash value of the price decrease and credit your counterparty's. This is why there are margin requirements: they're designed so that when a nightly debit happens, you will almost always have enough cash. The spread is referring to the futures market. If you have offsetting positions, then many events that earn you money on one contract will lose you money on the other (and vice versa). Eg, if you are long two 2-year treasury future and short a 10-year treasury future, and interest rates for both rise 0.01%, then as of the last market close your 2-year futures lose $71.54 and the 10-year future gains $70.98. The market rules recognize that the spread is less risky than the outright, and thus requires less margin to guarantee your trades.