How to Spread Bet on Bonds and Interest Rates
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Bonds Spread Betting
Q) Where can I Spread Bet on Bonds?
Q) Where can I Trade for Free on Bonds?
Q) Where can I find Free Live Prices on Bonds?
Q) Where can I find Free Bonds Charts?
Q) Where can I find Narrow Bonds Spreads?
Interest Rate Spread Betting
Q) Where can I Spread Bet on Interest Rates?
Q) Where can I Trade for Free on Interest Rates?
Q) Where can I find Free Live Prices on Interest Rates?
Q) How to Spread Bet on Interest Rates?
Q) Where can I find Free Interest Rates Charts?
Q) Where can I find Narrow Interest Rates Spreads?
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Spread Bet on Bonds and Interest Rates
How to Spread Bet on Bonds and Interest rates - an introduction to trading on bonds and Interest rates. Currencies fluctuate for a number of reasons eg changes interest rates, speculative trading and central bank intervention. If you are looking for Treasuries spread betting information, you're on the right website.
Put at a basic level a bond is an IOU. You effectively lend money to a company or government in return for a fixed level of income (coupon) and the guaranteed return of your investment at the end of the bond's life (known as 'the maturity date'). You then receive a certificate that you can sell on in the secondary market.
Governments pay a fixed rate of interest every year and so bonds' capital value will rise and fall depending on the short-term changes in local interest rates. Their prices can be affected by interest rate changes, currency movements and changes in the economic situation of the issuing country.
Many individual government bonds have abbreviated names eg UK government bonds are called Gilts (so called because the original bonds were gilt edged), US government bonds, T-Bonds and German government bonds, Bunds.
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How to Spread Bet on Interest Rates: Short Sterling Example
You decide to look up the short sterling future for March. A spreads company quotes you 95.40 - 95.64. The quote implies that by the third Wednesday of the current quarter, interest rates will be between 4.36% and 4.60%.
This is calculated by taking 100 basis points and subtracting estimated interest rates at the time of expiry, ie 100 - 95.40 = 4.6, and 100 - 95.44 = 4.36
You think that interest rates will rise so you sell the Sterling Future at 95.40 for £5 per tick (for this market 1 tick = 0.01).
As it happens the interest rates fall and therefore the short sterling spread rises. The Spread quote moves to 95.76 - 95.84. You decide to cut your losses.
Therefore you close your bet. To close a bet you place the same bet in the opposite direction. ie you Buy £5 per tick at 95.84 and multiply by the stake.
Your profit / loss is calculated by calculating the difference between the closing level (95.84) and the opening price (95.40).
Loss = (95.40 - 95.84) / 0.01 x £5 per tick
= (-0.44 / 0.01) x £5 per tick = -£220 loss
However let's say you were right and the market did fall and the trade was settled at 95.10.
Again your profit / loss is calculated by calculating the difference between the closing level (95.10) and the opening price (95.40).
Profit = (95.40 - 95.10) / 0.01 x £5 per tick
= (0.30 / 0.01) x £5 per tick = £150 profit
Short Sterling market quoted as of November 2006.
Bonds and Interest Rate Treasuries Markets
Each company will have their own specific online markets however many of the companies will offer most, if not all, of the following:
Interest Rates
- Euribor (Euribor)
- Euro dollar (Eurodollar)
- Short sterling
- Euroswiss
Bonds
- Bund
- Bobl (Eurobobl)
- Schatz (Euroschatz)
- UK Gilt
- Japanese 10 year Bond
- US Bond 10 year
- US Bond 30 year
Financial Spreads >>
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advantages of Spread Betting plus..." >> read
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Spread Betting Companies?
If you're looking for places to spread bet - have a look at the spread betting companies comparison.
How to Spread Bet
How to spread bet on Bonds and Interest Rates
How to spread bet on Commodities
How to spread bet on Forex
How to spread bet on Shares
How to spread bet on Stock Market Indices
Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'How to Spread Bet on Bonds and Interest Rates' by JW, updated 22-Dec-11
For related pages also see:
Bonds Spread Betting, updated 31-Jan-12
Bonds trading information, where to find free Bonds charts and prices, how to spread bet on Bonds like Bobl, Bund, Gilt, Schatz and T Bond...read article: Bonds Spread Betting.
Interest Rates Spread Betting, updated 31-Jan-12
Interest Rates trading information, where to find free Interest Rates charts and prices, how to spread bet on Interest Rates like Euribor, Eurodollar, Euroswiss and Short Sterling...read article: Interest Rates Spread Betting.
Spread Trading Bonds and Interest Rates, updated 31-Jan-12
Your guide to bonds and interest rates spread trading, bonds spreads comparison tables and your questions answered, where to find free bonds charts, live prices and more...read article: Spread Trading Bonds and Interest Rates.
Interest Rates Trading, updated 13-Feb-08
Adding the Northern Rock loans to the national debt makes for great headlines but it also shows how spineless the ONS actually is. At least the Northern Rock debt is backed up by a rather good mortgage book on the other side of the balance sheet. There is a whole host of much more...read article: Interest Rates Trading.
How to Spread Bet on Bonds and Interest Rates, updated 22-Dec-11
How to Spread Bet on Bonds and Interest Rates. A look at how to spread bet on bonds and interest rates such as short sterling. Plus answers to a range of how to spread bet on bonds and interest rates questions including which bonds and interest rates you can...read article: How to Spread Bet on Bonds and Interest Rates.
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