Spread Betting Margins - how to calculate the built in profit in Spread Betting Prices

Spread betting is a very popular form of betting nowadays but it can be difficult to understand how much built in profit there are in the prices offered. The reason is simple, the concept spreads is not so easy to understand. With normal bets a stake is placed on an event, this stake is the amount of risk taken by the punter in his financial enjoyment of the outcome of the event. With spreads this is not the case, the amount that is won or lost is derived by a multiplier value chosen by the punter (i.e. the stake). The punter then wins or loses an amount that is the product of the stake multiplied by how right or wrong the punter was in his assessment of the outcome. An example best clarifies this, a bookie proposes a spread of 0.9-1.1 for a future football match - Manu versus Blackburn. The punter can choose that the goal difference derived by the result (Manu score - Blackburn score) will be lower that 0.9 or higher than 1.1. Suppose the punter correctly chooses higher than 1.1 at a stake of