Listed options versus spread bets and CFDs

One FTSE 100 view, three contracts

A UK reader who wants to profit from a fall in the FTSE 100 can buy a put listed on ICE Futures Europe, or buy a put from a spread-betting or CFD firm. The three look alike on screen and behave alike while the index moves. They differ in who stands on the other side, in what they cost to open and close, in the rules the FCA applies to them and in how they are taxed. This page prices one put, the October 10,500 FTSE 100 put on Monday 17 August 2026, through all three routes, then works through writing an option through a spread bet, funding, tax and the protections that do and do not apply.

Firms are named where their published terms supply the numbers: IG for option spreads, margins and funding, CMC Markets and Plus500 for how other providers structure their products, and eight firms for the loss figures the FCA makes them publish. Each is a source of published terms, checked on 28 September 2026, not a view on the firm. The site has no commercial link with any of them.

Who is on the other side of each trade

A listed option is a contract registered at a clearing house. ICE lists ICE Clear Europe as the clearing venue for the FTSE 100 option (ICE code ESX); once a trade is registered, the clearing house becomes the buyer to every seller and the seller to every buyer, and the members that clear for each side post margin with it. The buyer of the put therefore does not depend on the particular writer, or the writer's broker, staying solvent: that risk sits with the clearing house and its members.

A spread bet or CFD on an option is a contract with one firm. The firm quotes the price, writes the terms (which strikes, which expiries, which settlement price), and pays out or collects when the position closes. Whether it hedges in the listed market is its own decision; the client has no claim on that hedge. Even one brand can mean two counterparties: at IG, spread bets are with IG Index Ltd (FCA register number 114059) and CFDs with IG Markets Ltd (195355), according to IG's own site. If a provider fails, the Financial Services Compensation Scheme pays eligible investment claims up to £85,000 per person per firm, the same limit that applies to a failed FCA-authorised options broker. Neither the clearing house nor the FSCS protects against the trade itself losing money.

What a spread-bet or CFD "option" actually is

The option a spread-betting or CFD firm sells is its own over-the-counter product. It has strikes and expiries the firm chooses, it is priced by the firm from the underlying market and its own volatility, and it ends in cash at a settlement price the firm's rules define. It is not a mark-up on an ICE option, and a provider's "FTSE 100 October 10,500 put" can settle at a different level, at a different time, from the ESX series with the same name. IG, for example, settles its daily FTSE options on the official close of the cash index and its weekly ones on the Friday close, and says its monthly index options "follow their own specific settlement processes", shown in the platform.

Other providers package the same idea differently. CMC Markets sells cash-settled options as spread bets and as CFDs on major indices including the FTSE 100, on a list of large US shares and on a few US-listed ETFs, among them gold and silver funds; it charges no commission, holding or financing fees, only the spread and a 0.7% conversion fee on foreign-currency results, and it deals in fractions down to 0.01 of an option. Plus500 offers option CFDs only, leveraged at up to 1:5 on the option's own price. That last design matters: on a bought option CFD margined at 20%, an option that falls to nothing costs five times the margin posted, which the IG-style structure, margined at the full premium, cannot do.

Smaller than one listed contract

A provider option is not the only way below one ESX contract's £10 a point. On the listed side, ICE's Mini FTSE 100 options (8LX) are £1 a point, though only for the next five daily expiries and the third Friday; Cboe's XSP is one-tenth the size of the S&P 500 index option (SPX); and 22 large UK companies, from AstraZeneca to Vodafone, have a 100-share ICE mini option beside the 1,000-share standard. Whether a broker offers a given mini and quotes a two-way price in it has to be checked on the broker's own screen; the basics page lists every contract size. On the provider side the steps are finer still: IG's £2-a-point minimum puts the October 10,500 put at £296, and CMC's fractions go lower.

One put, three ways: costs and tax in pounds

Model inputs. Monday 17 August 2026. FTSE 100 at 10,750, the library's model level (the index closed at 10,720.3 that day; price data: Yahoo Finance). October 10,500 put, European, 60 days to Friday 16 October 2026; volatility 14.94% at that strike from the library's assumed FTSE volatility skew; Bank Rate 3.75%; dividend yield 3.05% (FTSE Russell factsheet, 28 August 2026). Model value 145.82 points (£1,458.19 a contract), a mid-price of 146 points on the half-point tick. Listed quote 145 to 147, an illustrative 2-point spread (the library's width for its 60-day FTSE examples priced on 17 August; half the quoted spread each way, as the methods page sets out), plus £1.70 commission each way. Provider quote 144 to 148 at £10 a point: 4 points wide, the narrow end of the 4 to 8 points IG publishes for its FTSE 100 futures options, assumed the same for the CFD version, with no commission. All three are assumed to settle at the same index level. Tax at 24%, the higher rate, with the £3,000 annual exempt amount used by other gains; a loss is worth 24% only when there are gains to set it against, in the same year or a later one.

At the narrow end of IG's range the provider routes cost £8.30 more to open than the listed put, whose half-spread and commission come to £11.70; at the wide end, 8 points, the provider premium is £1,500.00. The gap widens when a position is closed early, because each route pays its spread again: £23.40 for a listed round trip against £40.00 to £80.00 for the provider's.

Before tax the listed put comes out ahead in every row: by £8.30 at expiry, and by £16.60 when sold in September, where each route pays its spread twice. The CFD option is taxed exactly like the listed put, so after tax it trails by 76% of those amounts. The spread bet is the odd one out. When the put wins, it keeps the whole £1,520.00 and is £358.49 ahead of the listed put after tax. When the put expires worthless, it loses the whole £1,480.00, while the listed loss of £1,471.70 cuts tax on other gains by £353.21; the spread bet is then £361.51 behind.

The two after-tax lines cross at an index level of 10,349, where the spread bet has made just £26.28. Above that level, including every outcome in which the put loses money, the listed route leaves more after tax, provided the loss relief can be used; below it, the spread bet leaves more. In the pricing model (risk-neutral, lognormal, taken from the assumed volatility skew), the index settles below 10,349 with probability 22.3% and below the 10,500 strike with probability 29.3%. These are properties of the model's prices, not forecasts.

Across a year the comparison works on the net result, not trade by trade. A year of £5,000 of gains and £4,000 of losses on listed options or CFDs is taxed on the net £1,000: £240.00 at 24%. The same year through spread bets pays nothing, so the spread bet is £240.00 ahead, less its wider spreads. A year of £2,000 of gains and £4,000 of losses leaves a net £2,000 loss on the listed route, worth £480.00 against other gains now or later; through spread bets it is worth nothing. The tax-free label therefore pays in a year that nets a gain and costs in a year that nets a loss.

The listed rows rest on two provisions. A put that finishes in the money is cash-settled, so the holder disposes of the right to the payment, with the cash as proceeds and the premium as the cost (TCGA 1992 s144A(3)); a put that expires worthless is abandoned, which counts as a disposal and gives a loss equal to the premium in the tax year it lapses (s144(4)). The CFD rows reach the same figures through s143, as one result when the contract closes (CG56100). The tax worked examples set the same put out on tax alone, with spreads left out (Example 18), and add a point that matters to writers rather than buyers: a listed option that is written and bought back is taxed in the tax year it was written, under s148, while a written CFD option has no s148 and falls into the year in which it is closed.

Writing an option through a spread bet: margin, the 50% close-out and the floor at zero

Selling an option is where the three routes part company most. A listed put written through a broker is margined by the clearing house and the broker, with no FCA close-out rule and no limit on what the account can end up owing. The same put sold as a spread bet or CFD to a retail client carries three FCA rules: a minimum margin to open, a forced close-out when the account's equity falls below half the margin needed, and a cap on the loss at the money in the account.

Model inputs. Monday 17 August 2026, FTSE 100 at 10,750. October 10,000 put, 60 days, volatility 16.89% at that strike from the assumed volatility skew; model value 51.11 points. A provider quote assumed 4 points wide around the model value, 49.11 to 53.11; the account sells at 49.1 points, the bid rounded down to one decimal place, at £10 a point, an opening price worth £491.00. Open positions are marked at the price that would close them: the offer, 2 points above the model value. Margin for a sold option at IG is the margin on the same-sized position in the underlying: 5% of the exposure on a major index, the FCA minimum, which is also IG's tier-one retail rate. Cash deposited: £6,000. Instant moves are at entry, with 60 days still to run; the historical falls are close-to-close moves (price data: Yahoo Finance, checked 28 September 2026).

At £10 a point the position carries £107,500 of exposure and needs £5,375.00 of margin to open. The close-out line is half of that, £2,687.50. Marked at the offer of 53.11, the position shows a £40.10 loss at once, the 4-point spread plus the rounding of the sale price, leaving equity of £5,959.90. Both lines move with the index, because the requirement is 5% of the current exposure. The table puts four historical one-day falls of the FTSE 100, taken from the Level 3 page's gap history, straight onto the position, with volatility 10 points higher at every strike.

With volatility unchanged, an instant fall to about 9,750 (9.3% down) brings the equity to the close-out line; with volatility 10 points higher the line arrives at about 10,068, a fall of 6.3%, because the put gains value from the volatility as well as from the fall. The equity reaches zero at about 9,596 (10.7%) with volatility 10 points higher and 9,408 (12.5%) with it unchanged. Three features of the rules show up in the table.

• The line triggers a close, not a price. COBS 22.5.13R requires the firm to close positions "as soon as market conditions allow" once equity is below half the margin requirement. After an overnight gap the first available price may already be far beyond the line, which is why the 9 March 2020 row closes with £1,832.00 left rather than £2,480.82.
• The floor is the account, not the trade. Under COBS 22.5.17R a retail client's liability for these products is limited to the funds in the account used for them. In the two largest falls the equity goes below zero, and the provider, not the client, bears the shortfall. CMC Markets puts it the same way on its options page: a short OTC option's potential loss is unlimited, but a retail client's loss is limited to the capital invested.
• The floor covers only money in that account. Cash held with the firm for other purposes, such as a separate share-dealing account, is outside the calculation (COBS 22.5.19G).

The same put written on ICE through a broker has none of this. The broker's margin rules decide when positions are liquidated, and a deficit left by a gap is a debt the client owes; the Level 3 page works through that case for a FTSE strangle, and its margin spiral shows how the requirement rises as equity falls.

The FCA's rules for retail CFDs and spread bets

COBS 22.5 applies to "restricted speculative investments" sold to retail clients: leveraged CFDs, leveraged spread bets, rolling spot forex and "restricted options", a narrow class of options that are in the money when sold and move one for one with the underlying. The rules took effect on 1 August 2019 for CFDs and spread bets and on 1 September 2019 for CFD-like options (FCA PS19/18). Listed options on an exchange are outside them.

Where the CFD is on an option, the FCA's guidance measures the exposure by the option's underlying: its worked example, a CFD on a restricted option referencing the FTSE 100 at £1 a point with the index at 7,070, has exposure of £7,070 (COBS 22.5.12G). The other rules in the section are short:

• margin must be posted in money, not shares or other assets (COBS 22.5.10R and 22.5.14R);
• positions are closed when equity falls below half the margin requirement (COBS 22.5.13R), and the firm must explain how that level is calculated before the first trade (COBS 22.5.15R);
• a retail client cannot lose more than the funds in the account used for these products (COBS 22.5.17R);
• no account-opening bonuses, rebates or other incentives (COBS 22.5.20R);
• every page and promotion carries a standard risk warning with the firm's own share of losing retail accounts (COBS 22.5.6R).

Binary options, which pay a fixed amount or nothing, were banned outright for retail clients from 2 April 2019 (COBS 22.4; FCA PS19/11). An offer of "binary options" to a UK retail account today comes from outside those rules, and the FCA register shows whether the firm making it is authorised at all.

The loss figures the providers publish

The risk warning's percentage is each firm's own calculation, redone every three months over the previous 12 (COBS 22.5.6R). An account counts as losing if the sum of its realised and unrealised results on these products over the 12 months is below zero, after all costs and charges; accounts that held no position are left out, and so are deposits and withdrawals. The figures below are the ones each firm's UK website displayed on 28 September 2026.

The range, 57.9% to 76% on one day, is the reason for quoting more than one firm: any single number describes that firm's clients and products over its last 12 months. The figures cover every product in scope at the firm, not options alone, and they move each quarter. No equivalent figure exists for listed options, because the rule covers only restricted speculative investments; that absence says nothing, either way, about how listed-option accounts fare.

Holding costs: none on the option, a nightly charge on a daily bet

An option's cost of time is already in its premium: at entry the October 10,500 put loses about £18.75 of model value a day through time decay, whichever route holds it, and nothing more is charged overnight. No funding is charged on the listed put; IG's funding page names daily funded bets and cash CFD positions as the positions charged; and CMC Markets states that its options carry no holding or financing fees.

Funding matters when the same view is held as a daily funded bet on the index instead of an option. IG's formula for an index spread bet is stake × price × (3.4% admin fee ± SONIA, the sterling overnight rate) ÷ 365: a long position pays the rate plus the fee, a short one receives the rate less the fee. IG's indicative sterling rate for the week of 21 September 2026 was 3.76%.

The short bet's small credit is not the whole story. When index constituents go ex-dividend the index drops, and IG credits long positions and debits short ones by the same amount, so a short position pays the dividends (IG's page on dividend adjustments). At the FTSE 100's 3.05% yield that is roughly £538.97 over 60 days on £107,500 of exposure (derived; the real adjustments follow each company's ex-date), far more than the interest credit. The figures assume the index stays at 10,750; funding is charged on each night's 10pm price, three nights at a time over a weekend.

How each route is taxed for a UK individual

The listed and CFD columns work to the same rates and triggers, which the tax worked examples set out event by event. Options cannot be held in a stocks and shares ISA, as the wrappers page explains, so the listed route sits in a taxed general account and the comparison here is between that account and an untaxed bet.

A hedge taxed on one side only

The spread bet's treatment cuts both ways when it is used as a hedge. Take a £107,500 FTSE 100 tracker fund held in a general investment account, moving £10 for each index point, protected by the October 10,500 put, and sold on 16 October so that its gain or loss is realised. BIM22019 does not help an individual here: hedging a personal portfolio is not a trade, so the bet stays outside tax while the fund stays inside it.

With the listed put the tax follows the combined result. With the spread bet it follows the fund alone: in the rising market the hedged position makes £1,020.00 and pays £600.00 of tax, 58.8% of what it made; in the falling market the relief of £1,320.00 is 33.2% of the combined loss. A fund held in an ISA changes the picture again, because its own gains and losses are then outside tax and only a listed put, held outside the ISA, is taxed. The portfolio hedging page sets out what protection costs before tax.

Compensation, complaints and the appropriateness test

• If the firm fails. A UK spread-betting or CFD firm and an FCA-authorised options broker are both covered by the FSCS for eligible investment claims, up to £85,000 per person per firm. The FSCS does not pay for losing trades: it "can't accept any claims that are for poor investment performance". A US broker-dealer holding listed options for a UK client is covered by SIPC instead; the US options page and the broker comparison map which firm sits where.
• If there is a dispute. Complaints against UK-authorised firms go to the Financial Ombudsman Service, whose award limit is £455,000 for complaints referred from 1 April 2026 about events from 1 April 2019. A US broker-dealer is outside its reach.
• Before the first trade. A firm that deals in any of the three without giving advice has to ask about the client's knowledge and experience and assess whether the product is appropriate (COBS 10A.2.1R). Options are not exempt, and a failed assessment brings a warning, not a ban; the basics page explains the test. CMC Markets asks retail clients to pass its own options test before they can trade options in an existing spread-bet or CFD account.
• Incentives. CFD and spread-bet firms may not offer retail clients sign-up bonuses or rebates (COBS 22.5.20R). The rule does not extend to listed-option brokers.

What changes from one route to another

The library's worked examples use listed options because their terms are public, identical at every broker, and cleared, so a figure on one page can be checked against the exchange. The same views can be held through a provider, at a different price, against a different counterparty and with a different tax result, as the tables above show in pounds. None of this is advice about which route suits any reader.

How these numbers are calculated

Pages that use this comparison

Strategy pages that mention holding an index view through a spread bet or CFD link here: the long put, bear put spread, short straddle, short strangle, uncovered short call, ratio spread, backspread and jade lizard.