RE: AVCT spread bets?9 Dec 2021 14:01
@chiefhelmet
With a spreadbet you are betting on the price going up (or down).
To do this you have to have some money in your account to make sure you can pay if you lose the bet.
Taking Avacta's rough current buy price of 115p, should you place a BUY spreadbet of £10 per point increased, then you will make £10 for each point it goes higher than 115p (at sell price), until you decide to close the bet.
However, should the company collapse and you lose everything then you would owe 115 x £10 = £1150 - This is the Notitional value, which determines the Margin required (deposit) in your account to place that bet.
Currently IG require you to have at least 25% of the Notional value for Avacta in your account on bets up to 650.
So, for a £10 bet at 115p the max loss is £1150
25% of £1150 is £287.50
Hence you need to have at least £287.50 in your account to place that bet i.e. cover the Margin.
From 20 Dec, Avacta's Margin is decreasing to 20%, so for the £10 bet above the Margin becomes 20% of £1150 = £230, thus I would only need £230 in my account to now place that same bet.
That then leaves an extra £57.50 margin available to me to place an additional bet (from the same amount of funds in my account).
I'm no expert but I think, with the exception of a few pounds and pence here and there, that's pretty much it!
Hope that helps
:D