Financial Range Betting

Published: 14/09/2012

Financial markets are constantly in flux. Thanks to bookmakers who offer financial wagering opportunities in contrast to traditional trading with agencies, it is possible to bet on the price of a commodity, the rate of exchange for a currency or the index of a stock market, such as the FTSE 100, tax- and commission-free. And among the most lucrative ways to wager is an action called “financial range betting.”

One of the simplest forms of financial range betting is what refers to as the “Boundary Barrier Range Bet.” Knowing that the price of a certain stock or the index value of a given market will rise and/or fall, a wager is made that the value will remain within a certain range for a specified period of time. This bet pays if the market never touches either of two pre-determined trigger barriers—one upside barrier (high) and one downside barrier (low).

Say the FTSE 100 is currently trading at 5488.29 and the bettor believes the index is about to move upwards. It is possible to wager that over the next five minutes, the index will not go below 5488.29 (low), nor will it reach as high as 5490.30 (high). To win on this barrier range bet, the market must never drop below its current level, nor may it exceed a full two-point gain before the wager’s expiry. The odds of the bet will be fixed at whatever rate the bookmaker offers and the potential loss is limited to how ever much is staked initially.

Similarly, it is possible to make a Boundary Barrier Range Bet that the exchange rate of the U.K. Pound, currently at €1.2611 will not fall as low as €1.20 or rise as high as €1.40 during the next month. Should the rate drop to €1.20, even for an instant, before the end of the month, the bet is lost. To win, the rate must constantly remain between the two barriers.

Another form of financial range betting is to forecast the final price or index at the time of the wager’s expiry. At Ladbrokes, for example, eighteen different market level ranges are offered on the FTSE 100, for which bets may be placed during a chosen betting period. There are nine “blue” market range cells above the current “live level” and nine “red” market range cells below the live level. The bettor may choose a blue or red cell to bet that the market level will finish between the levels (inclusive) of the market range cell.

Again, say the FTSE 100 is currently trading at 5488.29 and the bettor believes the index is about to move upwards and gain one point. It is possible to wager that at the end of the next five minutes, the index end up between 5489.00 and 5489.34 at odds of 20-to-1. To win on this range bet, the market must finish exactly within this range.

To increase the chances of winning, the bettor may also choose to wager on neighbouring ranges above and below the targeted one at slightly lower or higher odds. Once more, the payout for a successful wager is fixed at whatever rate the bookmaker offers, while any losses are limited to the amounts staked.

Unlike other forms of wagering with online bookmakers, financial range betting is not available 24/7. Because it is based on live trading data, it is usually offered only when the markets are open—closed on holidays and during non-trading hours. On the other hand, American and Asian markets are session when European markets are closed, so anyone with a keen sense of international financial trends can stand to do quite well betting on financial ranges.

Published on: 14/09/2012

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