7. Pricing And Hedging
This chapter tackles a range of controversial issues which have cropped up in the spread betting arena over the years.
Do they really want you to win?
This is a controversial subject – there are a couple of schools of thought:
- The “they want you to win” argument: which not surprisingly, tends to be implied in the marketing literature of the spread betting firms, and is based on the notion that all spread bets are hedged by the firms – so if you win they don’t lose, you’re happy and you bet again.
- The “they want you to lose” argument: which is based on the notion that the firms’ profits have to come from somewhere and that is very probably us – the punters. Think casinos…
It is worth stepping back for a moment ...