Posts from — April 2008
So crude oil prices are rocketing and Shell has reported handsome Q1 2008 profits but with Q2 oil prices also looking high…how to spread bet on Shell?
How to Spread Bet on Shell Shares?
The current price of the Royal Dutch Shell (September ‘A’) market value is 2054.6p – 2062.2p with FinancialSpreads.com. This market expires on 16-Sep-08. Therefore you can spread bet on Shell shares settling:
Higher than 2062.2p, or
Lower than 2054.6p
On the expiry date for this ‘September’ futures market, 16-Sep-08.
When spread trading FTSE 100 equities, you trade in £x per penny, where a penny in this case, is 1p of Shell share price movement. Eg if your stake was £4 per penny and the Shell shares move 11p then that would be a £44 difference to your profit (or loss!).
Worked Spread Betting Example
So taking the above spread of 2054.6p – 2062.2p let’s say that you think the Shell shares will close above 2062.2p on 16-Sep-08.
Therefore you could buy at 2062.2p for a stake of, let’s say, £2 per penny.
When ‘Buying’ a spread bet your profit / loss is worked out by taking the difference between the final price of the market and the price you made the spread bet at. You then multiply that by the stake per penny.
If on the settlement date the market closes at 2121p, then:
Your profit / loss = (2121.0p – 2062.2p) x £2 per penny stake.
= 58.8p x £2 per penny stake.
= £117.60 profit.
But if the market did not work out as expected and had the Shell shares closed down at 1989p, then you would have lost money on your investment.
Your profit / loss = (1989.0p – 2062.2p) x £2 per penny stake.
Loss = -73.2p x £2 per penny stake.
= -£146.40 loss.
i) spread betting markets quoted as of 30-Apr-08
ii) There are two classes of Shell shares, Shell (A) and Shell (B). For more details on spread betting on Shell (A) or Shell (B) or for details about the classes of shares go to: Shell Spread Betting.
It’s been a long time since we did any tips so 3 quick Spread Betting tips on Timing
Tip 72. Where possible, try to avoid trading at the beginning of the day. The markets often take some time to settle and can catch you out. Also because the Market Makers don’t want to get caught out the spreads on offer are often wider when the markets open. Consider trading 30 to 60 mins after the markets have opened. You can end up losing out on some opportunities but you are less likely to get caught out by unexpected trading news.
73. US Markets. Note that you can’t trade all the markets when the Dow opens. There is a staggered opening.
74. Trading at the end of play. The markets often have significant movements in the last 30 minutes of the day. This phenomenon has been seen a lot during the credit crunch and there are a number of reasons, eg:
a) Automated trading programs trading large positions and/or large numbers of positions
b) Positive / negative reports coming out of the US
c) The opening of the US markets / the US reaction to the UK market
d) The vicious circle that can quickly follow the above
As with the start of the day, the spread betting markets can be very volatile at the close…and as always with spread betting…care should be taken with your trading.
In the next set of spread betting tips we will be focusing on Greed.
Have a good weekend and Good Luck
Well it is taking a while and of course since we started this piece of work the FTSE 100 constituents have been moving to the FTSE 250 (eg Debenhams), taken off (eg Northern Rock) or Sold (eg ICI)…however we have been diligently ploughing on with creating a specific page for each FTSE 100 company…and we are now up to pages for 78 constituents…
What is it all about?
We want to create a simple reference point for you. A place where we offer some simple spread betting answers to your problems…eg looking at BAE…let’s say you want to spread bet on BAE…fine…but how?
We have some answers…
But how to spread bet on BAE?
We have some answers…
How to Spread Bet on BAE?
As with many financial markets, you can trade on the future price of shares, like BAE Systems shares, rising or falling. At the time of publication the BAE Systems (September) market is 498.1p – 500.5p with Financial Spreads. This market expires on 16-Sep-08.
Therefore you can spread bet on BAE shares settling: a) Above 500.5p, or b) Below 498.1p On the expiry date for this September futures market, 16-Sep-08.
When spread betting on FTSE 350 shares, you trade in £x per penny, where a penny is 1p of BAE Systems share price movement.
As an example if your stake was £10 per penny and the BAE shares move 4p then that would be a +/- £40 difference to your bottom line.
BAE Systems Spread Trading Example
Eg, let’s say, taking the above spread of 498.1p – 500.5p that you think the BAE Systems shares will rise above 500.5p on 16-Sep-08.
Therefore you could buy at 500.5p for a stake of, let’s say, £5 per penny.
And so let’s say that by the September closing date, the market closes at 548.p. If that happened then your P&L would be worked out as follows:
You take the difference between the final value of 548p and the opening price of 500.5p and then multiply that difference by the stake per penny of share price movement.
Profits = (548.0p – 500.5p) x £5 per penny stake.
= 47.5p x £5 per penny stake.
= £237.50 profit.
But had BAE Systems shares fallen and finished down at 455p, you would have lost.
= (455.0p – 500.5p) x £5 per penny stake.
Loss = -45.5p x £5 per penny stake. = -£227.50 loss.
We are always trying to increase the number of spread betting companies that we compare. I am pleased to announce that we have now added Spreadex to our Forex, Indices, Gold, Crude Oil and Commodities pages.
For more details see Best Spread Betting Companies