Calculating spread betting margins
Spread betting is a leveraged product, which means you only have to place a percentage of the full trade value to open a position. For example, if you placed a spread bet on a share you would need to deposit 20% of the full trade value as the margin requirement. View our margin rates on popular markets.
The margin you will be required to deposit reflects a percentage of the full value of the position you wish to open. We refer to this as 'position margin' on our platform. The position margin will be calculated using the applicable margin rates, as shown in the product library area on the platform.
For shares, different margin rates may apply depending on the size of your position or the tier of your position (or a portion of your position) in that instrument. The portion of the position that falls within each tier is subject to the margin rate applicable to that tier.
In order to calculate the position margin, the level 1 mid-price (shown on the trading platform) is used.
Position margin example
Company ABC (GBP) margin rates
| Tier | Position size (stake) | Margin rate |
|---|---|---|
| 1 | 0-10 | 10% |
| 2 | >10-30 | 15% |
| 3 | >30-50 | 20% |
| 4 | >50-100 | 30% |
| 5 | >100 | 50% |
Based on the margin rates in the table below for Company ABC (GBP), a position of £65 per point, using the level 1 mid-price of 275.0 (£2.75), would require a position margin of £3,437.50.
Your position margin requirement is calculated as follows:
| Tier | Position size | Margin rate | Margin |
|---|---|---|---|
| 1 | 10 | 10% | 10 x 275 x 10% = £275 |
| 2 | 20 | 15% | 20 x 275 x 15% = £825 |
| 3 | 20 | 20% | 20 x 275 x 20% = £1100 |
| 4 | 15 | 30% | 15 x 275 x 30% = £1237.50 |
| 5 | 0 | 50% | 0 |
| Total | 65 | Total = £3,437.50 |
The notional value of your total position is: £17,875.00 (65 x 275).
Spread betting using margin allows you to open a position by only depositing a percentage of the full value of the position. This means that your losses will be amplified and you could lose all of your capital. Profits and losses are relative to the full value of your position.
Spread betting using margin is not necessarily for everyone and you should ensure you understand the risks involved and if necessary seek independent professional advice before placing any spread bets.
See our spread betting guides to further your learning.
Disclaimer
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