Spread Betting – Nasdaq 100
The USA index called the NASDAQ 100 (some spread betting providers also refer to it as the US Tech 100) is the nearest thing we have to a worldwide technology stock index. It features all the major US players in this market, many of them world dominating brands such as Apple and Microsoft.
Trading the Nasdaq 100 Index by Dominic Picarda
Nasdaq 100 Rolling Daily Spreadbet: Example
The current price for a daily rolling bet on the NASDAQ 100 is 2355.0 – 2356.0. You think the index will be going down, and as you are spread betting it is easy to place a bet to profit from such a move. You choose to bet £5 on a downward move, and that is placed at the sell price of 2355.0.
It is your lucky day, and the index rapidly drops 100 points, so you decide to close your bet and take your profit. The actual quote your spread betting company gives you is 2252.6 – 2253.6, so your bet closes at the buying price of 2253.6.
Here’s how you calculate your profit.
- The number of points you have gained is 2355.0-2253.6
- that works out to 101.4
- your bet is placed at £5 per point
- so you won 101.4 times £5
- that’s a total of £507.
Sometimes, in fact fairly often, the price will not move in the direction that you anticipate, and then you must close your bet quickly to minimize your losses. Say in this case that your spread betting provider quotes you 2376.2 – 2377.2, and you decide to close your bet before it climbs any higher. Your bet closes at 2377.2, which it means you have lost 2377.2-2355.0, which is 22.2 points.
The amount you lost is 22.2 times your original stake, which is £5 per point.
Therefore you lost a total of £111.
Futures Bet: Nasdaq 100
Because it’s one of the spread betting indices which is more popular, you will find that you can bet on the NASDAQ 100 in different ways. You can get a futures style bet, which will run for several months, and in contrast to the daily rolling bet will not involve any interest. The current quote for that is 2348.6 – 2352.6.
You decide this time that the index is going up, and open a bet for £3 per point at 2352.6. A few weeks later when the quote is 2392.1 – 2396.1 you decide to close your bet for a profit. You calculate your winnings like this: –
- the total number of points that you gained is 2392.1-2352.6
- that works out to 39.5 points
- at your given stake of £3, you scored £118.50
Once again, the index might have run against your bet, and you would need to close your bet and cut your losses. Say the index went to 2335.7 – 2339.7. The bet would close at 2335.7.
- This time you have lost, and the amount is 2352.6-2335.7
- that works out to 16.9 points
- the original bet amount was £3 per point
- so you lose £3 times 16.9
- that gives a total loss of £50.70.
How to Spread Bet the Nasdaq 100
The NASDAQ 100 index is the US index of technology and electronics companies. It includes such companies as Apple, Comcast, Dell Inc., DirecTV, eBay, Google, Intuit, Microsoft, Research in Motion (makers of the BlackBerry), Starbucks, and Yahoo!, along with many other household names. It specifically excludes financial companies, for which NASDAQ created another index of 100 companies. In excluding financial corporations, the NASDAQ separates itself from the Dow Jones and the S&P 500 indices. Perhaps because of this, the NASDAQ has done better recently than the other two indices.
Unlike most other indices, the NASDAQ 100 includes some shares of non-US companies – Research in Motion is one of these, and so is Vodafone from Great Britain. There is also another index called the NASDAQ composite, which is not so popular for spread betting, and this includes all the companies, that is more than 3000, which are listed on the NASDAQ stock exchange.
In fact, to call it a stock exchange is a bit of a misnomer as the NASDAQ has never had physical premises for the trading to take place. The NASDAQ exchange started life as an electronic bulletin board in 1971, making it the first ever electronic stock exchange. This means it is organized slightly differently from other exchanges, where usually a “specialist” will make the market for any particular company. As the electronic information is available virtually instantaneously, the market for the NASDAQ is made by several “market makers”, that is companies who will buy and sell for the market, and deal with all the shares. This helps to provide liquidity to the shares, making them easy to trade.
Because of its technological tilt, the NASDAQ was hit hard when the bubble in that market burst in the early 2000’s. Now, however, most of the companies are “stayers”, rather than the proliferation of hopeful “dot-coms” that littered the market in those days.
The NASDAQ 100 represents a high value market segment in a high-value country, and is subject to all the ups and downs that you would expect such a publicly high profile index to have. Rumours around the world can be reflected in the performance of the index.
With that in mind, it is more important than usual to make sure that you have figured out the worst-case scenario before you place a spread bet. You should always do this anyway. With the leverage of spread betting, it is all too easy to lose more money than you had expected to, and the counter to this is to have a firm value in mind where you will close your bet if it is losing. Surprisingly, despite being told of the dangers of hanging onto a position when it is losing, this is where most beginners fail. Some people find it impossible to close a losing spread bet until it has mounted up to much too high a level, knocking a big hole in their accounts.
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