Gearing
Gearing is a central concept within spread
betting. In betting terms, if a small bet can win you
a potentially huge sum of money then this is known as
a highly geared bet.
The most heavily geared market available to the spread
bettor is cricket, where run totals can be anywhere
between 70 and 800. With these figures you could be
looking at winnings that exceed a thousand pounds from
a mere £2 bet. For punters looking to really test
their adrenaline capacity, the most heavily geared market
is ‘total test match series runs’ where
one can expect a quote somewhere in the region of between
5,000 and 7,000.
There are occasions where a spread company will increase
the gearing by multiplying variables together. This
might occur to add volatility and spice to what would
otherwise be a fairly sedate market. It tends to only
occur with low-total numbers bets, such as total bookings
in a game of football. Since the total number of bookings
is limited by the number of players on the pitch, the
potential profits and losses for buyers and sellers
is relatively low. A spread company may look to add
additional volatility by multiplying the total number
of bookings in the first half by the total number in
the second half. If there were 3 bookings in the first
half and 3 in the second, this would result in a total
bookings number of 9, even though there were only actually
6 bookings. At the same time, if there were 6 bookings
in the first half and none in the second, this would
result in a total bookings number of 0, even though
there were actually 6 bookings.
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