Spread Betting Glossary


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  S&P500 Index
Also known as SPX500. Standard and Poor's American stock market index. The index of 500 of the largest companies on the official list of the New York Stock Exchange.
  Scalper or Day Trader
A short-term trader who buys and sells throughout the day in order to profit from small price in a security. Futures and options traders who switch their positions within a very short time in order to make money from small gains frequently.
  Screen price
the price of the underlying security in the cash market. As opposed to quote price.
  Screen Quote
orders and stops may be left based on when the underlying market trades at a price, confirmation of which appears on the dealer screens.
  Scrip or Bonus Issues
New free shares, usually used to dilute the share price with no diminution in the value of the total investment. Shares are split or bonus shares are offered to reduce the current share price and improve liquidity/marketability. If a share price rises sharply the company may issue free shares to existing shareholders. So, for example, if a shareholder holds 500 shares in a company worth 200p each their holding would be worth £1,000. If the company made a one-for-one scrip issue they would now hold 1,000 shares but they would be worth 100p, The effect of this is that although everything continues as before the share price falls.
  SEAQ
the Stock Exchange Automated Quotations system for UK securities which displays market maker quotations.
  Sector
A group of shares that are similar with respect to type and industry, e.g. the Banking or Mining sector.
  Security
The collective name for any financial instrument, such as a stock, share, index, currency or commodity. As such securities is the name for shares, prefs and bonds of a company.
  Sell
When you Sell (or go Short) this means you are selling a security (or taking a short position) with the expectation that it is going to fall in price. You can also Sell at the lower of the two spread prices when you want to close out an exisiting long position.
  Sell bet
A bet that will be profitable for every tick that the price falls. In other words a down bet on a spread; a bet that the outcome will be lower than the quote offered by the spread firm. Also called a down bet or going short.
  SETS
the Stock Exchange Electronic Trading Service.
  Settlement price
the price that you received when you close your spread bet.
  Settlement price
the price at which a bet is closed. For financial markets this maybe based on an official exchange price.
  Share certificate
An official document issued by the company stating the name of the shareholder and the number of shares owned.
  Shareholders' Funds
Original value of the company's share capital plus the additional reserves since the company came to market.
  Share perks
A number of companies give benefits to their shareholders. These include discounts on wine, clothes, holidays, dry-cleaning and light fittings.
  Shares outstanding
The number of shares able to be bought or sold in the market. It is desirable to see this number stay the same from one year to the next. The stock market works on the concept of supply and demand. If more shares are made available on the market, then theoretically, the shares that existed before are now worth less.
  Shorts
Government stock due for repayment within five years.
  Short Selling
Same as Shorting below. A transaction whereby an investor borrows stock from a shareholder for a fee and with a guarantee to return the equity at an agreed later date. In theory, the borrower is anticipating a decline in the share price, which will allow them to benefit from the differential between the price at which they sell the borrowed stock and the price at which they repurchase it. For spreadbetters, it is selling the hope that the stock will decline. The trade is then closed by buying - the 'long' - to balance the book.
  Short
When you go Short (or Sell) this means you are selling a security (or taking a short position) with the expectation that it is going to fall in price.
  Shorting
Selling more shares than you physically own in the belief the shares will fall and craftily buying the shares at a lower level to cover that short position. Shorting is having a 'down bet' in a market. A strategy of selling a share you don't yet own at an agreed price level, in the belief that the price will fall before completing the deal, allowing you to make a profit. In practice, short-selling is generally not an option offered to private investors in the UK as it requires the 'lending' of shares by brokers. Spread bets make it easy, though, as the spreadbetting companies carry out the necessary share transactions.
  Short sterling
The 3 month interest rate contract traded on LIFFE. All spread betting companies offer a market on this contract.
  Slippage
Slippage is an unpleasant word for an unpleasant event. It's the experience of not getting filled at (or even very close to...) your expected price when you place a market order. This can happen because either: market price is simply moving too fast, the market is not liquid or you're talking to an unmotivated broker. Or, of course, all three. In spread betting this can occur if the market closes just short of your stop level and then opens up the next day a long way through you will be stopped out at the level that the market opens up at the next day and not at your stop level.
  Smaller Company Shares
Small company shares can be a fertile ground for financial betting. The term small company is something of a misnomer. Small company shares are in companies worth between £20 million and £150 million, which can still be quite a large concern. Small company shares are often listed on the Alternative Investment Market or AIM.

The chief point to note about small company shares is that they traditionally outperform blue chip shares. They were incredibly successful in the 1980's and early 1990's and this pattern may resume. Not all bookmakers, however, will accept bets on smaller company shares.
  Special dividend
A return of capital to shareholders outside the normal dividend schedules.
  Speculation
Taking an opinion on the change in hte price of a security. Speculative trading carries a higher risk of loss but the profits can also be higher.
  Spot
The purchase and sale of a foreign currency or commodity for immediate delivery. The price of a security for immediate delivery. This is usually executed two days after the trade. Or "cash" is where the actual underlying market is trading (spot = prevailing market price at this moment in time). The spot price is the current delivery price of a given commodity being traded on the spot market.
  Spread
Difference between the bid and offer price. The difference between the two prices quoted by the spread betting company i.e. the lower 'bid' price and the higher 'offer' price. The spread is the difference between the Buy and the Sell price for a particular security that you may want to spread trade. This spread is effectively the cost for you to open the trade. In other words the difference between the buying and the selling price. Or a variety of investments. The spread is placed around the price of the undelying asset in the market. For example, if the FTSE 100 index is trading at 5500, a spread betting company may quote a spread of 5499-5501 for its FTSE 100 bet. It is also where the spread trading companies make their profit.
  Spread trading
a term used in the US to refer to spread betting. Spread Trading is officially called Spread Betting in order to maintain its tax-free status - see 'Tax treatment' for an explanation of our understanding of the current tax rules regarding Spread Betting/Trading.
  Stake
The Stake is the number of Euro (or Sterling) per 1 tick movement that you are betting when you open a spread trade. If for example your stake on a trade is €5 per tick, then for each one tick movement in a particular direction you will either make or lose €5 depending on whether you are Long or Short on the security in question. The stake is as such the size per unit of movement for a spread bet, e.g. £1 per penny movement for an equity spread bet. In other words this is the amount per point bet by a client.
  Stamp duty
Tax levied when you buys shares. This is a government tax of 0.5% paid by the buyer on all share transactions. No stamp duty is applicable on spread bets.
  Standard & Poor's
Credit rating agency.
  Stock market sectors
The stock market consists of a number of different sectors that are grouped according to the GICS industry standard. Before purchasing a stock it is essential that you determine what sector the stock belongs to and then have a look at the GICS sector chart to ensure that the sector as a whole is not trending downwards or sideways.
  Stop
A Stop (or Stop Loss) is an automatic order set to close out a current open position should the stop loss price set be reached. When spread trading stop loss orders allow you to limit your losses to a certain amount. The opposite of a Stop Loss is a Limit Order.
  Stop-At-A-Winner
Specific to sports spreads. This is a market, usually on horseracing, on how many races must be run before a favourite wins. Make-up is ten times the number of the raceon the card (so a favourite winning the fourth race means a make-up of 40). If there are no winners make up is total number of races at the meeting plus ten (so 70 at a six-race card)
  Stop Loss
This is a pre-determined price at which a position will be closed to protect against further losses. It is critical to use stop losses when spread betting.
  Subsidiary Company
Where a larger company owns more than 50pc of a smaller company.
  Support
When a company's share price fails to fall below a certain price level this level is deemed to be support. Support occurs when there are lots of buyers at a particular price level, so each time the share price reaches this level the price typically rises due to the increased buying pressure. Technical analysts believe share prices can go much lower once they eventually break through an area of strong price support. The opposite of Support is Resistance. Support is as such a term used to describe the bottom of a stock's trading range. A level or zone where buyers in a market keep the price from falling lower.
  Stag
Someone who applies for shares in a new issue with the intention of selling them immediately at a profit.
  Stale bull
Someone who has bought shares in anticipation of a quick rise which has not materialised.
  Stamp duty
a tax on foreign or share market transactions, usually a percentage of the total transaction amount.
  Standard deviation
A statistical measure indicating volatility and showing how far a price has deviated from the average.
  Stake
The Stake is the number of Euro per 1 tick movement that you are betting when you open a spread trade. If for example your stake on a trade is 5 per tick, then for each one tick movement in a particular direction you will either make or lose 5 depending on whether you are Long or Short on the security in question.
  Stock Markets
There are three stockmarkets in the UK. The main one is the London Stock Exchange (LSE), which lists more than 900 companies. Companies quoted on this stockmarket must comply with strict rules in terms of size, how long they have been operating and how they are run.

The Alternative Investment Market (AIM) was launched in 1995 for companies that don't meet all the criteria for an LSE listing. It is the first rung on the publicly quoted ladder for small, growing companies but, as these organisations are less developed, AIM shares tend to be riskier than those on the LSE. There are 700 companies listed on AIM.

The third is Ofex, short for 'off exchange'. Also launched in 1995, this is for unquoted companies that have issued shares. There are currently 150 companies trading on Ofex. Because of their size and the scarcity of information published about them, Ofex is the riskiest market in the UK.
  Stop-loss
A Stop (or Stop Loss) is an automatic order set to close out a current open position should the stop loss price set be reached. When spread trading stop loss orders allow you to limit your losses to a certain amount. In other words the level below the purchase price at which a spread better automatically closes their position. This is basically a pre-determined level at which a bet is closed to limit the loss on that bet if the price moves against you. In other words an instruction to close a bet automatically if the price moves too far in the wrong direction. For example, if you place a buy bet on the FTSE 100 at 5700-5701, you could place a stop loss at 5500 to sell if the price hits that level, to limit your loss to 201 points. The opposite of a Stop Loss is a Limit Order. Also, see guaranteed stop-loss.
  Stop Order
The instruction to buy or sell below the current price of the financial instrument in question.
  Stopped Out
When the bookmaker's quote hits the specific stop-loss level you placed.
  Straddles
An option strategy involving one call and one put with the same strike and same expiry date. In other words an options trading strategy whereby the investor buys one call and one put option with the same execution and expiry date. This allows the buyer to take advantage of price movement in both directions.
  Strangle
an option strategy involving a call and a put with different strike and same expiry. Terms Specifically Relating To Single Stocks Trading. In other words an options investment strategy, whereby the investor purchases a call and a put option with different strike levels but the same expiry date. The investor will then make a profit if prices break above a set range. The strategy is basically a bet on volatility.
  Striking price
The price at which an option is granted. The strike price is the agreed price at which an option can be exercised. See Options.
  Stop loss
a way of limiting losses on shares or spread bets. You simply tell your broker or spread betting company that if a share price falls to a certain level, your shares or your spread bet must be sold, no matter what. A stop-loss can specified in percentage terms or in price terms. For example, you can either set the stop loss at 10 per cent below the price you paid, or at 90p if you bought at 100p.
  Striking price
The price at which an option is granted. See Options.
  Sunk Cost
Sunk cost is an expression representing the unrecoverable amount of money that has already been placed into an ongoing investment or project. It is one of the simplest, yet most commonly misused financial measurements of a project. More information on Sunk Cost is available here 
  Support
The price level at whicha security or index will tend not to fall below, either for technical reasons regarding the price or psychological ones, for example gold falling below $1000 per ounce. When a company's share price fails to fall below a certain price level this level is deemed to be support. Support occurs when there are lots of buyers at a particular price level, so each time the share price reaches this level the price typically rises due to the increased buying pressure. Technical analysts believe share prices can go much lower once they eventually break through an area of strong price support. The opposite of Support is Resistance.
  Swap
A security, agreed between two parties, that seeks to offset interest rate or currency fluctuationsto match the parties' assets to their liabilities. The security is basedupon cash flow rather than the underlying amount of fixed debt.
  Sweetener
A high-yielding stock or share included in a portfolio to raise the average yield overall.
  Switch
The purchase and sale of investments carried out at the same time to change the composition of the portfolio.