Posts from — December 2010

Financial Market Comments from David Jones, Chief Market Strategist, IG Index.

As trading resumes in London this morning, after four days of Christmas indulgence, the FTSE will be looking to carry on where it left off.

London’s FTSE went into the Christmas break on a resounding high, touching 6000 briefly on Thursday afternoon and then closing above that psychological barrier at 6008.92 on Friday.

The index has also opened well this morning, following a strong afternoon session on Wall Street that came despite the release of some disappointing consumer and housing data yesterday. Resources companies are to the fore at the moment, as commodity prices have soared over the past few days.

Yesterday the financial spread betting markets saw the biggest gain in seven weeks for gold. Silver closed at its highest settlement price in 30 years. Copper also surged to a record in London, while aluminium, zinc and lead also advanced.

As things stand, this has been the UK’s best December since 1993 and, overall, 2010 has seen an 11% gain for the FTSE. In a year that didn’t promise much beyond uncertainty for business, there has been a run of better-than-expected results for several large and leading companies on both sides of the Atlantic, leading investors to back equities further than anticipated.

Before Friday, the FTSE hadn’t closed above 6000 since June 2008, and it will now be interesting to watch and see whether investors will want to take profits out of this latest surge, or dig in and set 6000 as a base for further growth in 2011.

Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Good Luck!

DB

The above comments do not constitute investment advice and Clean Financial accepts no responsibility for any use that may be made of them.

Content provided by IG Index which is Authorised and regulated by the Financial Services Authority. FSA Register number 114059.

Where to Spread Bet on Diageo?

You can spread bet on Diageo with any of the following companies:

• Financial Spreads
• IG Index
• Inter Trader

Although note that you can also spread bet with other Spread Betting Companies.

Diageo Spread Betting – More Details

For more information on trading Diageo, also see Diageo Spread Betting.

Spread Betting on Diageo

Should you want to speculate on UK listed companies like Diageo then one possibility is to spread bet on the Diageo share price.

If you were to look at the Paddypowertrader website, as of Wednesday December 15, they were showing the Diageo Rolling Daily market at 1160.4p – 1162.6p. As a result, an investor could spread trade on the Diageo shares:

• Moving above 1162.6p, or
• Moving below 1160.4p

When making a spread bet on UK shares you trade in £x per penny. Therefore, if you decide to invest £6 per penny and the Diageo share price moves 5p then that would make a difference to your profit/loss of £30. £6 per penny x 5p = £30.

Rolling Daily Equities Markets

Be aware that this is a Rolling Daily Market and so it does not have a closing date. You do not have to close your trade, should it still be open at the end of the trading day, it just rolls over to the next trading session.

Should your trade roll over, if you are speculating that the market will:

• Move up – then you will often be charged a small financing fee, or
• Move down – then a small payment is usually credited to your account

For more information on Rolling Daily Markets, and a fully worked example, please see Rolling Daily Spread Betting.

Diageo Rolling Daily Shares Trading Example

Now, if you consider the spread of 1160.4p – 1162.6p and assume:

• you have done your analysis, and
• you think that the Diageo share price is likely to rise above 1162.6p

then you might decide that you are going to buy a spread bet at 1162.6p for a stake of, for example, £3 per penny.

Therefore, you make a profit of £3 for every penny that the Diageo shares increase and move higher than 1162.6p. Having said that, you will make a loss of £3 for every penny that the Diageo market decreases below 1162.6p.

Put another way, should you ‘Buy’ a spread bet then your profits (or losses) are worked out by taking the difference between the settlement price of the market and the price you bought the spread at. You then multiply that difference in price by your stake.

As a result, if after a few sessions the shares started to move upwards then you could choose to close your spread bet to lock in your profit.

Taking this a step further, if the market did go up then the spread, determined by the spread betting firm, could change to 1213.8p – 1216.0p. In order to close your spread bet you would sell at 1213.8p. Accordingly, with the same £3 stake this trade would make you a profit of:

Profit = (Settlement Price – Initial Price) x stake
Profit = (1213.8p – 1162.6p) x £3 per penny stake
Profit = 51.2p x £3 per penny stake
Profit = £153.60 profit

Spread betting can go against you. In this case, you had bet that the share price would rise. Naturally, the share price could fall.

If the Diageo share price fell then you might choose to close your position in order to restrict your losses.

So if the spread dropped to 1116.1p – 1118.3p then you would close your spread bet by selling at 1116.1p. This would result in a loss of:

Loss = (Settlement Price – Initial Price) x stake
Loss = (1116.1p – 1162.6p) x £3 per penny stake
Loss = -46.5p x £3 per penny stake
Loss = -£139.50 loss

Note – Diageo Rolling Daily spread quoted as of 15-Dec-10.

Spread Betting Account Offers

If you are looking to open a spread betting account then for the latest spread betting offers please see Spread Betting Offers.

For a more detailed look at the spread betting markets, spread sizes and account services offered by a range of spread betting companies also see Spread Betting Account.

Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Where to Spread Bet on Severn Trent?

You can spread bet on Severn Trent with any of the following companies:

• Financial Spreads
• IG Index
• Tradefair

Although note that you can also spread bet with other Spread Betting Companies.

Severn Trent Spread Betting – More Details

For more information on trading Severn Trent, also see Severn Trent Spread Betting.

Spread Betting on Severn Trent

If you are going to speculate on firms like Severn Trent then one solution is a spread bet on the Severn Trent share price.

If an investor was to look at the Capitalspreads trading site, as of Wednesday 15th December, they were showing the Severn Trent Rolling Daily market at 1423.2p – 1426.8p. As a result, an investor can spread trade on the Severn Trent shares:

• Moving higher than 1426.8p, or
• Moving lower than 1423.2p

When financial spread betting on UK shares you trade in £x per penny. Therefore, if you invest £10 per penny and the Severn Trent shares move 5p then that would change your P&L by £50. £10 per penny x 5p = £50.

Rolling Daily Equities Markets

This is a Rolling Daily Market which means that unlike a futures market, there is no settlement date. If your trade is still open at the end of the trading day, it simply rolls over to the next session.

If you do roll over a trade and you are spread betting that the market will:

• Move up – then you will usually be charged a small overnight financing fee, or
• Move down – then a small payment is normally credited to your account

For a more detailed breakdown of Rolling Daily Markets please read our article Rolling Daily Spread Betting.

Severn Trent Rolling Daily Shares Spread Betting Example

If you think about the above spread of 1423.2p – 1426.8p and assume that:

• you have done your market analysis, and
• it leads you to think that the Severn Trent shares will go higher than 1426.8p

then you may decide that you are going to buy a spread bet at 1426.8p and invest, for example, £5 per penny.

Therefore, you make a profit of £5 for every penny that the Severn Trent shares rise above 1426.8p. Conversely, however, it also means that you will make a loss of £5 for every penny that the Severn Trent market moves below 1426.8p.

Put another way, if you were to ‘Buy’ a spread bet then your P&L is calculated by taking the difference between the closing price of the market and the price you bought the spread at. You then multiply that difference in price by your stake.

As a result, if after a few hours the shares moved higher then you could consider closing your position in order to secure your profit.

As an example, if the market increased then the spread, determined by the spread betting firm, could change to 1452.5p – 1456.1p. In order to close your position you would sell at 1452.5p. As a result, with the same £5 stake you would make a profit of:

Profit = (Closing Price – Opening Price) x stake
Profit = (1452.5p – 1426.8p) x £5 per penny stake
Profit = 25.7p x £5 per penny stake
Profit = £128.50 profit

Spread betting on shares can work against you. In this case, you wanted the share price to increase. Of course, it could go down.

If the Severn Trent share price weakened, against your expectations, then you could choose to close your position in order to restrict your losses.

So if the market dropped to 1398.3p – 1401.9p you would close your position by selling at 1398.3p. If so, that would mean you would lose:

Loss = (Closing Price – Opening Price) x stake
Loss = (1398.3p – 1426.8p) x £5 per penny stake
Loss = -28.5p x £5 per penny stake
Loss = -£142.50 loss

Note – Severn Trent Rolling Daily spread quoted as of 15-Dec-10.

Spread Betting Account Offers

If you are looking to open a spread betting account then for the latest spread betting offers please see Spread Betting Offers.

For a more detailed look at the spread betting markets, spread sizes and account services offered by a range of spread betting companies also see Spread Betting Account.

Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Where to Spread Bet on J Sainsburys?

You can spread bet on J Sainsburys with any of the following companies:

• Financial Spreads
• Capital Spreads
• Paddy power trader

Although note that you can also spread bet with other Spread Betting Companies.

J Sainsburys Spread Betting – More Details

For more information on trading J Sainsburys, also see J Sainsburys Spread Betting.

Spread Betting on J Sainsburys

Should an investor decide to invest in firms such as J Sainsburys then one solution could be spread trading on the J Sainsburys share price.

Looking at the paddypowertrader site, as of Wednesday 15th December, they were showing the J Sainsburys Rolling Daily market at 375.8p – 376.4p. As a result, an investor could spread trade on the J Sainsburys shares:

• Rising above 376.4p, or
• Falling below 375.8p

Whilst spread trading on FTSE 350 shares you trade in £x per penny. So, if you chose to invest £20 per penny and the J Sainsburys share price changes by 5p then that would make a difference to your profits (or losses) of £100. £20 per penny x 5p = £100.

Rolling Daily Equities Markets

You should note that this is a ‘Rolling Daily Market’, therefore in contrast with futures markets, there is no settlement date. If a trade is still open when the markets close at the end of the day, it will simply roll over to the next session.

If your trade does roll over and you are speculating on the market to:

• Rise – then you are usually charged a small overnight financing fee, or
• Fall – then you will usually receive a small credit to your account

If you would like a fully worked example then see Rolling Daily Spread Betting.

J Sainsburys Rolling Daily Equities Spread Trading Example

Now, if we think about the spread of 375.8p – 376.4p and make the assumptions:

• you have done your market research, and
• you feel that the J Sainsburys share price looks like it will move higher than 376.4p

then you could decide that you want to go long of the market at 376.4p and risk, for example, £10 per penny.

So, you gain £10 for every penny that the J Sainsburys shares push above 376.4p. On the other hand, you will make a loss of £10 for every penny that the J Sainsburys market falls lower than 376.4p.

Considering this from another angle, if you were to buy a spread bet then your profits (or losses) are worked out by taking the difference between the final price of the market and the price you bought the spread at. You then multiply that price difference by your stake.

As a result, if after a few hours the stock started to increase then you might think about closing your spread bet to secure your profit.

So if the market increased then the spread, set by the spread trading company, might change to 390.5p – 391.1p. You would close/settle your spread bet by selling at 390.5p. Therefore, with the same £10 stake your profit would be calculated as:

Profits (or losses) = (Settlement Price – Opening Price) x stake
Profits (or losses) = (390.5p – 376.4p) x £10 per penny stake
Profits (or losses) = 14.1p x £10 per penny stake
Profits (or losses) = £141.00 profit

Trading equities, whether by spread betting or otherwise, is not straightforward. In this example, you had bet that the share price would increase. Naturally, it can also go down.

If the J Sainsburys shares weakened, against your expectations, then you might choose to close your position in order to restrict your losses.

If the market fell to 364.2p – 364.8p then this means you would settle your position by selling at 364.2p. If so, that would mean you would lose:

Profits (or losses) = (Settlement Price – Opening Price) x stake
Profits (or losses) = (364.2p – 376.4p) x £10 per penny stake
Profits (or losses) = -12.2p x £10 per penny stake
Profits (or losses) = -£122.00 loss

Note: J Sainsburys Rolling Daily equities market accurate as of 15-Dec-10.

Spread Betting Account Offers

If you are looking to open a spread betting account then for the latest spread betting offers please see Spread Betting Offers.

For a more detailed look at the spread betting markets, spread sizes and account services offered by a range of spread betting companies also see Spread Betting Account.

Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Where to Spread Bet on Scottish & Southern?

You can spread bet on Scottish & Southern with any of the following companies:

• Financial Spreads
• IGIndex
• Tradefair

Although note that you can also spread bet with other Spread Betting Companies.

Scottish & Southern Spread Betting – More Details

For more information on trading Scottish & Southern, also see Scottish & Southern Spread Betting.

Spread Betting on Scottish & Southern

Should you decide to speculate on firms such as Scottish & Southern then one possibility could be to spread bet on the Scottish & Southern share price.

If an investor was to look at the Tradefair spread trading site, as of Wednesday 15th December, they were showing the Scottish & Southern Rolling Daily market at 1170.4p – 1172.6p. As a result, you can spread bet on the Scottish & Southern shares:

• Increasing higher than 1172.6p, or
• Decreasing lower than 1170.4p

When spread betting on FTSE 350 equities you trade in £x per penny. So, if you decided to invest £10 per penny and the Scottish & Southern share price moves 5p then that would make a difference to your profits (or losses) of £50. £10 per penny x 5p = £50.

Rolling Daily Equities Markets

You should note that this is a ‘Rolling Daily Market’, therefore unlike a futures market, there is no closing date. If your trade is still open at the end of the trading day, it simply rolls over to the next session.

If a bet is rolled over and you are spread betting on the market to:

• Go up – then you will usually be charged a small overnight financing fee, or
• Go down – then you will normally receive a small credit to your account

To learn more please read Rolling Daily Spread Betting.

Scottish & Southern Rolling Daily Shares Spread Trading Example

Now, if we think about the spread of 1170.4p – 1172.6p and make the assumptions that:

• you have done your market analysis, and
• you feel that the Scottish & Southern shares look like they will go above 1172.6p

then you could decide that you are going to buy a spread bet at 1172.6p and risk, for example, £5 per penny.

Therefore, you win £5 for every penny that the Scottish & Southern shares push higher than 1172.6p. Conversely, however, it also means that you will lose £5 for every penny that the Scottish & Southern market falls below 1172.6p.

Put another way, if you buy a spread bet then your P&L is worked out by taking the difference between the settlement price of the market and the price you bought the spread at. You then multiply that difference in price by your stake.

As a result, if after a few hours the stock rose then you might want to close your position and therefore guarantee your profits.

Therefore, if the market moved up then the spread, determined by the spread betting company, might change to 1196.1p – 1198.3p. In order to close your position you would sell at 1196.1p. As a result, with the same £5 stake you would make a profit of:

Profit / loss = (Closing Price – Opening Price) x stake
Profit / loss = (1196.1p – 1172.6p) x £5 per penny stake
Profit / loss = 23.5p x £5 per penny stake
Profit / loss = £117.50 profit

Speculating on shares, whether by spread trading or otherwise, doesn’t always go to plan. In this case, you had bet that the share price would go up. Naturally, it can also decrease.

If the Scottish & Southern shares began to drop then you might choose to close your trade in order to restrict your losses.

If the spread fell to 1146.2p – 1148.4p you would settle/close your trade by selling at 1146.2p. If so, that would mean you would lose:

Profit / loss = (Closing Price – Opening Price) x stake
Profit / loss = (1146.2p – 1172.6p) x £5 per penny stake
Profit / loss = -26.4p x £5 per penny stake
Profit / loss = -£132.00 loss

Note – Scottish & Southern Rolling Daily spread correct as of 15-Dec-10.

Spread Betting Account Offers

If you are looking to open a spread betting account then for the latest spread betting offers please see Spread Betting Offers.

For a more detailed look at the spread betting markets, spread sizes and account services offered by a range of spread betting companies also see Spread Betting Account.

Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.