Cotton Spread Betting Guide

Cotton Spread Betting Guide

Cotton Spread Betting Guide

arrow_forwardLive Cotton Chart
arrow_forwardLive Cotton Prices
arrow_forwardWhere to Spread Bet on Cotton
arrow_forwardHow to Spread Bet on Cotton


Live Cotton Chart and Prices



Where Can I Spread Bet on Cotton?

Most spread betting brokers offer prices and charts on commodities including Cotton e.g.:

navigate_beforeComparison Scroll navigate_next
Company Commodity
Markets?
Commodities
Min Stake
Mobile
Apps
Guaranteed Stop Free If Not Triggered? Inactivity Fee Trading Offer Apply
Financial Spreads Review check_box £0.50 check_boxiOS
check_boxAndroid
check_box £0 check_box Apply

Review
City Index Review check_box £0 check_boxiOS
check_boxAndroid
cancel £0 cancel Apply

Review
ETX Capital Review check_box &pound:0.50 check_boxiOS
check_boxAndroid
cancel £15 cancel Apply

Review
IG Review check_box £1-5 check_boxiOS
check_boxAndroid
check_boxWindows
check_box £12 cancel Apply

Review


How to Spread Bet on Cotton

Let’s imagine that you are considering financial spread betting on Cotton, you go on a spread trading site, like Inter Trader, and see they are offering the real time market price at:

Cotton (March) Futures: $93.46 – $93.86

Here is what you can expect from a futures spread betting market

The Spread Betting Market: Cotton (March) Futures
Price (Spread): $93.46 – $93.86
This Means That: You can bet on the Cotton Futures market closing:

  arrow_upward  Higher than $93.86, or
  arrow_downward  Lower than $93.46

At the close of trading on the closing date for the ‘March’ futures spread betting market, 22 February 2012.

It is important to note that, as this is a futures market, your position will automatically close itself when the March Cotton contracts expire, 22 February 2012. However, you can close your trade before the closing date.
Points (Units) Traded: With futures markets, financial spread bets on the Cotton market are priced in £x per cent.

Where a cent is $0.01 of the commodity’s price movement.

E.g. if Cotton changes by 40¢ ($0.40) then you would gain or lose 40 times your stake.
Stake: You decide how much you are going to risk per cent, e.g. £2 per cent, £4 per cent, £15 per cent etc.
Quick Staking Example: If your stake is £3 per cent and Cotton moves $0.34 (34¢), you would lose or win £3 per cent x 34¢ = £102.


Worked Spread Betting Example | Taking a Bullish View of Cotton

Financial spread trading on the commodity to move up

You Now Choose to Buy or Sell: Where do you think that Cotton will finish at on 22 February 2012:

  arrow_upward  Higher than $93.86? or
  arrow_downward  Lower than $93.46?

Let’s Say You Decide to Go Long:   arrow_downward  Higher than $93.86
You Select How Much to Risk, Let’s Say You Opt For: £3 per cent
What Happens Now?
  • You will win £3 for each cent ($0.01) Cotton closes above $93.86
  • You will lose £3 for every cent ($0.01) Cotton closes lower than $93.86
When Betting on a Market to Go Up Your Profit or Loss = (Final Price – Opening Price) x stake per cent
 
Trading Scenario 1 Cotton rises and the price of the spread betting futures market becomes $94.33 – $94.73.
Lock in Your Profit? At this point, you may choose to let your futures spread bet run to expiry or close it, i.e. close your position to lock in your profit. In this instance you opt to settle your position at the current quote by selling the market at $94.33.
Your Profit or Loss = (Final Price – Opening Price) x stake per cent
($94.33 – $93.86) x £3 per cent
$0.47 x £3 per cent
47¢ x £3 per cent
Your Profit or Loss = £141 profit
 
Trading Scenario 2 Cotton falls and the spread betting futures market changes to $93.44 – $93.84.
Limit Your Loss? At this point, you may choose to keep your futures spread bet open until expiry or close it, i.e. close your position and limit your losses. In this instance you decide to close your bet at the current price by selling at $93.44.
Your Profit or Loss = (Final Price – Opening Price) x stake per cent
($93.44 – $93.86) x £3 per cent
-$0.42 x £3 per cent
-42¢ x £3 per cent
Your Profit or Loss = -£126 loss


Spread Betting Example | Selling Cotton

Spread betting on the commodity to fall in value

You Now Decide to Buy or Sell: Your research leads you to believe that Cotton will close on 22 February 2012:

  arrow_upward  Higher than $93.86? or
  arrow_downward  Lower than $93.46?

Let’s Say You Decide to Go Short:   arrow_downward  Lower than $93.46
You Decide How Much to Risk, Let’s Say You Choose: £2 per cent
What Next?
  • You will lose £2 for every cent ($0.01) Cotton settles above $93.46
  • You will win £2 for every cent ($0.01) Cotton settles lower than $93.46
If You Are Betting on a Market to Fall Your Profit or Loss = (Opening Price – Final Price) x stake per cent
 
Trading Scenario 3 Cotton decreases and the financial spread betting market is revised and moved to $92.66 – $93.06.
Time to Take Your Profit? You may decide to leave your futures trade open until expiry or close it in order to take your profit. In this example you decide to settle your trade at the current market price by buying the market at $93.06.
Your Profit or Loss = (Opening Price – Final Price) x stake per cent
($93.46 – $93.06) x £2 per cent
$0.40 x £2 per cent
40¢ x £2 per cent
Your Profit or Loss = £80 profit
 
Trading Scenario 4 Cotton pushes higher and the futures market adjusts and moves to $93.42 – $93.82.
Close and Limit the Loss?You can decide to let your position run to expiry or close it, i.e. close your spread bet to restrict your losses. In this instance you choose to settle your bet by buying at $93.82.
Your Profit or Loss = (Opening Price – Final Price) x stake per cent
($93.46 – $93.82) x £2 per cent
-$0.36 x £2 per cent
-36¢ x £2 per cent
Your Profit or Loss = -£72 loss


Cotton Notes:


AuthorAlex Turner

Senior Editor, SpreadBetMagazine

Leave a Reply

Be the First to Comment!

Notify of
wpDiscuz