Spread Betting Glossary

Bear
Bid / Offer Spread
Bull
Bullion
Closing Price
Commodity
Corporate Action
Dividends
Financing Costs
Hedging
Index
LIBOR
Liquidity
Long
Margin Requirements
Out of Hours Trading
Sector
Selling Short
Underlying
Volatility

Bear
An investor who is negative towards shares, believing prices will fall. A Bear market is one where share prices across the entire market are generally, and consistently, falling.

Bid / Offer Spread
The difference between the buying price (Offer), and the selling price (Bid).

Bull
An investor who is positive towards shares, believing prices will rise. A Bull market is one where share prices across the entire market are generally, and consistently, rising.

Bullion
Gold, silver, platinum, or palladium, in the form of bars or ingots.

Closing Price
The closing price is the last price for a tradable instrument at the time the market closes.

Commodity
A physical substance, such as food, grains, and metals, which is interchangeable with another product of the same type, and which investors buy or sell, usually through futures contracts.

Corporate Action
Any event initiated by a corporation which impacts its shareholders. For some such events, shareholders may or must respond to the corporate action or select from a list of possible actions. Examples of corporate actions include dividend payments, mergers, rights issues and stock splits.

Dividends
That part of a company's profit after tax which is distributed to shareholders.

Financing Costs
Spread bet positions carried overnight will incur financing costs for the full consideration of the position. If a client opens a position with a 5% margin, finance overnight will be on the 100% balance. Clients who are long with a spread bet will pay interest to LSE Spreads; clients who are short may receive interest from LSE Spreads.

Hedging
A way of reducing the risk of losses that may occur if interest rates, share prices or foreign exchange rates move in the wrong direction.

Index
A statistical indicator, providing a representation of the value of the securities which constitute it. Indices often serve as barometers for a given market or industry and benchmarks against which financial or economic performance is measured.

LIBOR
The London Interbank Offered Rate, the rate charged by one bank to another for lending money.

Liquidity
The level of continual buy and sell activity making up the market demand for the shares and indicating the ease with which investors can undertake transactions.

Long
Buying an investment with a view of the investment going up (opposite of short).

Margin Requirements
Investors are asked to deposit a small percentage of the overall cost that would be required if they were to purchase the equivalent shares in the physical market. Even though the spread bet investor's outlay is small in comparison to the equivalent physical trade, the investor will still be exposed to the same potential profit and loss. This means that your potential Return on Investment is magnified.

Out of Hours Trading
LSE Spreads will allow clients to trade selected major stocks and indices outside the normal trading hours.

Sector
A distinct subset of a market whose components share similar characteristics. Stocks are often grouped into different sectors depending upon the company's business. For example the FTSE 100 has banking, oil and gas and pharmaceutical sectors.

Selling Short
This is practice of selling shares that you do not own in the hope that the share price falls before you have to settle the contract. If the price does fall you can then buy the shares at the lower price and pocket the difference.

Underlying
Is the security or commodity that is delivered or being traded when dealing in futures or options.

Volatility
How quickly the price of a security rises and falls over time. A highly volatile share can be risky for short-term investors who stand a greater chance of buying at a peak and selling in a trough at a loss.

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Spread Betting, CFDs and Forex may not be suitable for all investors so ensure you fully understand the risks involved, and seek independent advice if necessary. These products are leveraged products and carry a high level of risk to your capital as it is possible to lose more than your initial investment. *Tax laws may change.

For the purposes of trading CFDs and Spread Betting, London South East Limited has introduced you to LSE Spreads, which is a trading name of Spread Co Limited ("Spread Co"), a company registered in England and Wales under registered number: 05614477, with its registered office at 22 Bruton Street, London W1J 6QE, authorised and regulated by the Financial Services Authority (FSA registration number 446677). For the purposes of trading CFDs and Spread Betting, the contract is between you and Spread Co and your account is with Spread Co. All dealing, administration and settlement in relation to your account is undertaken by Spread Co. London South East Limited is an Introducer Appointed Representative of Spread Co.

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