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Financial spread offers the exciting opportunity to participate in and profit from the investment boom without having to pay any capital gains tax. It is tax free, thus increasing your earnings yield.

HOW FINANCIAL SPREAD WORK

Financial spread has a wide range of application suitable for a broad spectrum of investors, enabling them to 'bet' on the price movements of numerous shares, stocks indices, bonds, currencies and commodity futures.

When u make a financial spread transaction, you never actually own the stock, bond, currency or commodity, instead u buy the spread -speculating broker's quote when u speculate that a market will rise. If d market subsequently goes up as u predicted your winning multiply, conversely, if the market moves in the opposite direction to your prediction, then u losses will multilpy.

A spread is a quote made up of two prices, which straddle the underlying market price. The higher 'offer' price is for buyers and the lower 'bid' price is for the sellers.

Let's look at an example of investing in uba shares thru financial spreading. It's is august and your strategy indicates that you should invest in the uba shares. u call your financial spread company for a price of the october contract ( the nearest and most active futures contract is usually known as the 'front month') and the quote is 565 - 570.

You buy =N=100 a point at 570, this is the equivalent of =N=57,000.00 investment in uba shares. Let's suppose your position turns out to be correct and a few weeks later your instinct tells u to close your position for a profit. The financial spread company is now quoting 678 - 683 for the october contract and u close your position by selling the spread =N=100 a point at 678.

U have now made a profit of 678 - 570 = 108 points, at =N=100 this represents a =N=10,800.00 profit, a tax free return of around 19% on your investment of =N=57,000.00 original investment in less than 2 months! wowwwww

Hmmm Bambo2,
Is this Financial spread operational in Nigeria at the moment??

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If what you did yesterday still looks big to you, you haven't done much today .
......Mike Bertola.

It sounds pretty much like options and leverage used to achieve profit from price differences (arbitrage) on a given spread(price difference).
Both options are leverage can really be used in any market. (as long as u can buy on credit and sell before you have to pay your creditor) but I'm not sure it is really applicable to our financial market. I'm thinking this is due to many factors I'm not even sure I know (though I'm guessing it could be because .

As an aside to Bambo: I've noticed for some time that most of your posts talk about practices applicable in the US but not feasible in Nigeria. Although I feel some should be adopted, it is necessary to have a road map for them. Our finance industry is not as developed as d us not to mention UK or other people. I honestly don't have a clue on the road map save what you mentioned recently about credit firms which I also been thinking about for some time.
I believe what you just spoke about will be useful in our markets since there're many "buy-and-hold" people in our country

hey Bambo2, where are you? Tell us how to do this in our markets. and how UN-illegal it is (as long as it isn't illegal, I suppose it is enough for us)
I think we only have stock market right? d rest like trade, futures etc no dey right.

I am so impressed by viewing this awesome & useful post. Really, you deserve honor for this great job. Best regards....



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