A financial spread bet is a wager made on financial activity and is made to determine the outcome of that activity. A spread is a range of outcomes and the bet is made to determine whether the result will be above or below the spread.
For example: the spread of the oil price is between $35 – $37 a barrel, the bettor places a bet that at a given time the price of an oil barrel will be above $37. The bettor placed a bet of $5 for every $0.5. At the end of the bet the price of the oil barrel stands at $40 – this means the bettor made $5 x 6 (0.5×6=$3) = $30.
The spread bet can be made on all kinds of financial products including stocks, commodities, spread betting and so on.
Spread bet is considered a legal type of bet which is regulated and mostly common in the United Kingdom. There is no tax on the winnings of a spread bet.
Spread bet is also common in sports betting as it is a common type of bet (over/under) especially for results of sporting events.