Spread Betting on Carbon Emissions

Where to Spread Bet on Carbon Emissions

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Commodities (min stake)	£1	£1	£1	£1	£0.50	£0.50	£1
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Financial Spread Betting on Carbon Emissions

The Spread Trading Market	Carbon Emissions (December) Futures
Spread Betting Quote	€8.66 - €8.86
How the Spread Works	Now you can trade on the Carbon Emissions Futures market closing:   Higher than €8.86, or   Lower than €8.66 At the close of trading on the settlement date for the 'December' futures spread betting market, 14 December 2012. It should be noted that, because this is a futures spread bet, your trade will close itself when the December Carbon Emissions futures contracts expire, 14 December 2012. However, you can also choose to close your position before the expiry date.
Points (Units) Traded	With futures markets, spread bets on the Carbon Emissions market are made in £x per cent. Where a cent is €0.01 of the commodity's price movement. E.g. if Carbon Emissions changes by 45c (€0.45) then you would gain or lose 45 times your stake.
Stake	You choose your stake per cent, e.g. £1 per cent, £3 per cent, £8 per cent etc.
Quick Example	If, as an example, your stake was £4 per cent and Carbon Emissions moves by €0.31 (31c), you would lose/win £4 per cent x 31c = £124.

Fully Worked Trading Example | Taking a Long Position on Carbon Emissions

You Now Select Whether to Buy or Sell	Where do you think that Carbon Emissions will close on 14 December 2012:   Higher than €8.86? or   Lower than €8.66?
Let’s Assume You Buy	Higher than €8.86
You Decide Your Stake Size, Selecting	£3 per cent
What Next?	You will win £3 for every cent (€0.01) Carbon Emissions settles higher than €8.86 Your trade loses £3 for each cent (€0.01) Carbon Emissions closes lower than €8.86
If You Are Going Long of a Market Your Profit or Loss =	(Settlement Value - Initial Value) x stake per cent
Example 1	Carbon Emissions rises and the spread trading market is revised to €9.30 - €9.50.
Close for a Profit?	At this point, you can opt to let your futures trade run to expiry or close it, i.e. close your position for a profit. In this case you decide to close your trade now and sell the market at €9.30.
Your Profit or Loss =	(Settlement Value - Initial Value) x stake per cent
	(€9.30 - €8.86) x £3 per cent
	€0.44 x £3 per cent
	44c x £3 per cent
Your Profit or Loss =	£132 profit
Example 2	Carbon Emissions drops and the quote for the spread betting futures market is adjusted and moved to €8.48 - €8.68.
Close and Limit the Loss?	You may decide to leave your futures trade open until expiry or close it, i.e. close your trade to limit your losses. In this instance you choose to close your position at the current market price and sell at €8.48.
Your Profit or Loss =	(Settlement Value - Initial Value) x stake per cent
	(€8.48 - €8.86) x £3 per cent
	-€0.38 x £3 per cent
	-38c x £3 per cent
Your Profit or Loss =	-£114 loss

Spread Trading Example | Going Short of Carbon Emissions

You Select Whether to Go Long or Short	Do you believe that Carbon Emissions will settle on 14 December 2012:   Higher than €8.86? or   Lower than €8.66?
You Might Decide to Go Short	Lower than €8.66
You Choose Your Stake Size, Let's Say You Choose	£2 per cent
So What Next?	Your trade loses £2 for each cent (€0.01) Carbon Emissions closes above €8.66 You will win £2 for each cent (€0.01) Carbon Emissions settles lower than €8.66
When Selling a Spread Bet Your Profit or Loss =	(Initial Value - Settlement Value) x stake per cent
Example 3	Carbon Emissions decreases and the quote for the spread betting market is revised and set at €7.88 - €8.08.
Time to Lock in a Profit?	You could now opt to leave your futures trade open until expiry or close it, i.e. close your position to lock in a profit. In this instance you opt to settle your trade at the current quote and buy at €8.08.
Your Profit or Loss =	(Initial Value - Settlement Value) x stake per cent
	(€8.66 - €8.08) x £2 per cent
	€0.58 x £2 per cent
	58c x £2 per cent
Your Profit or Loss =	£116 profit
Example 4	Carbon Emissions moves higher and the financial spread betting market moves to €8.96 - €9.16.
Close and Restrict Your Loss?	You may decide to keep your futures spread bet open until expiry or close it, i.e. close your trade and restrict your loss. For this example, you decide to settle your bet early by buying the market at €9.16.
Your Profit or Loss =	(Initial Value - Settlement Value) x stake per cent
	(€8.66 - €9.16) x £2 per cent
	-€0.50 x £2 per cent
	-50c x £2 per cent
Your Profit or Loss =	-£100 loss

Carbon Emissions Notes:

• Financial spread betting prices as per FinancialSpreads.com as of 2 February 2012
  
  
• Many spread betting companies will also give you the option of trading on Carbon Emissions in euros/cent and dollars/cent
  
  
• In addition, spread betting also lets you speculate on a broad range of other asset classes, for more details please see:
  
  
  • Index Financial Spread Betting
  • Spread Betting on FX Markets
  • Spread Betting on Stocks and Shares

Demo Accounts for Spread Betting on Carbon Emissions

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Spread Betting on Commodities

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