Spread Betting and Dividend

Dividends are of vital value when it comes to investing and the stock market world. They are of particular importance when it comes to value investors and higher dividend payments usually signal significant profits and a healthy cash flow. It is important to keep an eye on the history of dividend payments if you are interested in investing into profitable and well managed business.

When it comes to financial spread betting dividends still play important role even though officially there is no dividend in spread betting. It is essential that you understand how dividends are treated and calculated in spread bets. Why? As you might notice an individual stock will open lower on ex-dividend day and the difference will equal to the amount of dividend (all things being equal). Thus adjustment for dividend plays central role in financial spread betting.

You might have heard before that there's no dividend in financial spread trading but it is not entirely true and special adjustments are made to accommodate this issue. But in order to better understand how it works we need to look at two different types of bets separately.

• Quarterly Bets: There is no dividend payment in futures bets, but if a stock goes ex-dividend before expiry date the futures price will be adjusted for it and usually will be lower that the spot price.
• Rolling Daily Bets: Dividend payments are handled the same way they are processed when you trade shares. Your broker will credit your account with a dividend payment (although most of the brokers will pass only 80%-90% of the value) if you have a long position and debit your account accordingly if you hold a short position.

If you prefer making rolling daily bets don't be surprised when your trading broker will credit or debit your account to make the necessary adjustments for the dividend. Please also note that if you trade indices the same rules apply and your positions will incur dividend payments or deductions.