Size up the best value

SIZE matters. So say advertisers of the Renault Clio. That claim might be debatable when it comes to cars, but size certainly matters when considering the spreads charged by financial bookmakers.

It matters because the narrower the spread, the bigger the potential profit for the punter. A bet on the FTSE 100, where the spread is five points, will incur lower costs than a bet on the index with a 10-point spread.

A private investor making one £10-a-point bet on the Footsie each week could save up to £2600 in a year by using the bookie quoting the five-point spread, rather than the one with a 10-point spread.

Unfortunately, just as there is no supermarket that is cheapest for all food items, so there is no financial bookie that charges a narrower spread than its rivals on all bets.

On Tuesday, I spent some time comparing the spreads quoted by three of the bookmakers that publish live prices on the web - IG Index, Financial Spreads and CMC - for bets on a range of individual shares. Of these, CMC, which launched as a spread bookmaker only in May this year, often offered narrower spreads than its rivals. For instance, take a bet on Sainsbury shares in mid-December. On Tuesday, CMC was quoting a spread of 345.5-347.5 with Financial Spreads at 345-350 and IG Index 344-350.

If I expected the shares to rise, I could make a £10-a-point up-bet from the top of one of these spreads. The top of CMC's spread, at 347.5, would be the most cost effective place to open a bet. If the shares went on to rise 20p in the next week, pushing all three spreads 20 points higher, then I could close my bet with CMC at 365.5, pocketing a profit of £180. If I made the same bet with Financial Spreads, my profit would be £150, while with IG I would be pocketing £140.

Internet banking stock Egg provided a contrast. On Tuesday, CMC was quoting 133-138.5 for the shares in December, with Financial Spreads quoting 134-138 and IG 133-138. The narrowest, at four points, was Financial Spreads.

Of course, narrow spreads are not everything. Many spread betting enthusiasts put a premium on personal service from their bookmaker. Others may want access to bets such as FTSE 100 options, grey markets or the Brent crude oil price, that are not offered by all bookies. CMC for instance does not quote spreads on any of these.

For the serious spread betting trader, the best course is to have accounts with three or four different bookmakers and shop around for the best deals.

Retiring Galileo spearheads Team Europe
BRITAIN'S biggest horse races on the flat took place in the spring and summer. Earlier this month we had France's setpiece, the Prix de l'Arc de Triomphe. This Saturday is America's big day, the Breeders' Cup meeting in New York.

Europe's challenge is considered strong, with Irish-trained Derby winner Galileo renewing rivalry with his conqueror in the Irish Champion Stakes, Fantastic Light, in the Classic, before retiring to stud. They could come up against Sakhee, winner of the Arc, but being in the same ownership as Fantastic Light, he may go for the Turf instead.

Bookmaker IG Index will be quoting a spread later this week on the success of the European horses over the eight Breeders' Cup races. A win will be worth 25 points, second place 10 points with five points for third. On this basis, IG was on Tuesday expecting to quote a spread of 66-70 - implying two wins and two seconds.

Anyone expecting Galileo and company to do even better than this over the eight races could make an up-bet from 70, risking perhaps £10 a point. Remember though, that losses could be large if the Europeans happen to do much worse than expected.

BEWARE: Financial spread betting can seriously damage your wealth. Many bets, unless protected by a 'guaranteed stop', can result in huge losses if events go against you.