Wheat Spread Betting Guide

Wheat Spread Betting Guide

Wheat Spread Betting Guide

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


Live Wheat Chart and Prices



Where Can I Spread Bet on Wheat?

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

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How to Spread Bet on Wheat

Let’s say that you want to financial spread bet on Wheat, so you look on a spread trading site, such as Financial Spreads, and see that they are offering the live quote:

Wheat (March) Futures: $595 – $596

This is what you can expect from a trade:

Market Wheat (March) Futures
The Spread $595 – $596
How the Spread Works You can spread bet on the Wheat Futures market settling:

  arrow_upward  Above $596, or
  arrow_downward  Below $595

On the closing date for the ‘March’ market, 20 February 2012.

It should be noted that, as this is a futures spread bet, your position will close when the March Wheat futures markets expire, 20 February 2012. Nevertheless, you can also opt to close your trade prior to the expiry date.
Units Traded Spread bets on the Wheat market are made in £x per $1.

Where $1 is $1 of the commodity’s price movement.

E.g. if Wheat changes by $40 then you would lose/win 40 multiples of your stake.
Stake Size per Unit You decide your stake per $1, e.g. £1 per $1, £4 per $1, £15 per $1 etc.
Staking Example If, as an example, you decided on a stake of £4 per $1 and Wheat moves by $32, you would lose / win £4 per $1 x $32 = £128.


Worked Example | Taking a Long Position on Wheat

Financial spread betting on the commodity market to increase in value

You Now Consider Whether to Buy or Sell Where do you feel that Wheat will close on 20 February 2012:

  arrow_upward  Above $596? or
  arrow_downward  Below $595?

Let’s Say You Go Long   arrow_downward  Above $596
You Choose How Much to Risk, Let’s Assume You Choose £5 per $1
Now What?
  • You win £5 for every $1 Wheat settles above $596
  • You lose £5 for each $1 Wheat settles lower than $596
If You Are Spread Betting on a Market to Rise Your P/L = (Settlement Price – Opening Price) x stake per $1
 
Trading Scenario 1 Wheat increases and the commodities spread betting market is revised and changes to $619 – $620.
Lock in a Profit? You could choose to leave your position open until expiry or close it to lock in a profit. For this example, you choose to close your trade at the current price and sell the market at $619.
Your P/L = (Settlement Price – Opening Price) x stake per $1
($619 – $596) x £5 per $1
$23 x £5 per $1
Your P/L = £115 profit
 
Trading Scenario 2 Wheat falls and the futures market becomes $576 – $577.
Time to Restrict the Loss? You could choose to keep your futures spread bet open until expiry or close it in order to limit your loss. In this example you opt to settle your trade at the current rate by selling at $576.
Your P/L = (Settlement Price – Opening Price) x stake per $1
($576 – $596) x £5 per $1
-$20 x £5 per $1
Your P/L = -£100 loss


Fully Worked Spread Betting Example | Taking a Short Position on Wheat

Online spread betting on the commodity market to fall in value

You Now Work Out Whether to Go Long or Short Where do you think that Wheat will finish at on 20 February 2012:

  arrow_upward  Above $596? or
  arrow_downward  Below $595?

Let’s Say You Choose to Sell   arrow_downward  Below $595
You Select Your Stake, Let’s Say You Select £3 per $1
So Now What?
  • You lose £3 for each $1 Wheat settles higher than $595
  • You win £3 for each $1 Wheat settles below $595
If You Are Spread Betting on a Market to Decrease Your P/L = (Opening Price – Settlement Price) x stake per $1
 
Trading Scenario 3 Wheat slips and the spread trading market is revised and moved to $562 – $563.
Lock in Your Profit? At this point, you may decide to let your bet run to expiry or close it to take a profit. For this example, you opt to settle your trade and buy the market at $563.
Your P/L = (Opening Price – Settlement Price) x stake per $1
($595 – $563) x £3 per $1
$32 x £3 per $1
Your P/L = £96 profit
 
Trading Scenario 4 Wheat climbs and the spread betting market is moved to $622 – $623.
Limit the Loss?You could opt to leave your futures spread bet open until expiry or close it, i.e. close your trade to limit your losses. In this example you opt to close your trade now and buy at $623.
Your P/L = (Opening Price – Settlement Price) x stake per $1
($595 – $623) x £3 per $1
-$28 x £3 per $1
Your P/L = -£84 loss


Wheat Notes:


AuthorAlex Turner

Senior Editor, SpreadBetMagazine

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