Bet Types

A binary bet is a bet on a proposition - in this case a financial event. If you agree with the proposition you "Buy" or if you disagree with the proposition you "Sell". Unlike a traditional odds bet a binary bet is quoted as a two-way price, a BUY and a SELL.

If the proposition occurs - for example, the 'FTSE to close 12 points higher by midday' - the market is said to make up at 100. If the proposition does NOT occur then the market is said to make up at 0. A binary bet will only ever make up at 100 or 0.

The greater the likelihood of the event happening the higher the price. For example, a price of 91-93 suggests the market expects the event has a 92% likelihood of happening. If you agreed with the proposition you would buy, in this example, at 93. If you disagreed you would sell at 91.

Binary bet winnings and losses are calculated in the following manner:

When BUYING, Profit/Loss = The closing price minus the opening price times your bet size (per point).

When SELLING, Profit/Loss = The opening price minus the closing price times your bet size (per point).

Example One:

The bet is that "the FTSE will close higher on the day". The price is 38-43. You BUY (agree with the proposition) at 43 for £5 per point. The FTSE does close higher on the day, meaning that the bet makes up at 100. Therefore your winnings are:

(100 - 43) x £5 = £285

Example Two:

The same bet, that "the FTSE will close higher on the day". The price is 38-43. You BUY (agree with the proposition) at 43 for £5 per point. The FTSE does NOT close higher on the day, meaning that the bet makes up at 0. Therefore your winnings - or losses in this case - are:

(0 - 43) x £5 = -£215

Example Three:

The same bet, that "the FTSE will close higher on the day". The price is 38-43. You SELL (disagree with the proposition) at 38 for 10 pence per point. The FTSE does NOT close higher on the day, meaning that the bet makes up at 0. Therefore your winnings are:

(38 - 0) x 10 pence = £3.80

Importantly, to be able to place a binary bet you must have enough Margin. Margin is, quite simply, enough money to cover your potential losses.

Therefore, if you buy at 37 for £10 per point your potential downside is £370. You would therefore need at least £370 in your account.