UK listed betting house, IG Group, has received regulatory approval to expand its spread betting operation to Australia. They will be open for business next Tuesday.
In essence, you bet on the movement of a share or share index.
The Australian newspaper gave an example of how it works.
The punter stakes a minimum $10 bet for every 1 cent movement in a company's share price, or one point movement in a share index. A punter betting on Lihir Gold yesterday would have been quoted a September "spread" of 132c to 135c, similar to Lihir's current share price. If customers think that the Lihir price will rise above 135c, they can place a bet of, say, $50 for every 1c share price movement. If, after time, the price rises 40 cents, a punter has a profit of $2,000. The catch is that losses can be equally dramatic if the share price falls, although punters can choose to limit their losses. Bearish punters can also make "down" bets if they believe a share will fall below the spread.
In essence, you bet on the movement of a share or share index.
The Australian newspaper gave an example of how it works.
The punter stakes a minimum $10 bet for every 1 cent movement in a company's share price, or one point movement in a share index. A punter betting on Lihir Gold yesterday would have been quoted a September "spread" of 132c to 135c, similar to Lihir's current share price. If customers think that the Lihir price will rise above 135c, they can place a bet of, say, $50 for every 1c share price movement. If, after time, the price rises 40 cents, a punter has a profit of $2,000. The catch is that losses can be equally dramatic if the share price falls, although punters can choose to limit their losses. Bearish punters can also make "down" bets if they believe a share will fall below the spread.
