Will Virgin save Northern Rock? Will they take advantage of the beleaguered bank? Whatever you think the markets reacted positively today to news of Virgin being the favourite to ‘rescue the rock’

At the time of writing the Northern Rock (March) market is 109.7p - 110.1p with FinancialSpreads.com. This market expires on 18-Mar-08.

Therefore you can spread bet on Northern Rock shares settling:

Above 110.1p on 18-Mar-08
or
Below 109.7p on 18-Mar-08

With Northern Rock shares, you trade in £X per penny, where a penny is 1p of share price movement. Eg if your stake was £12 per penny and Northern Rock shares move 8p then that would be a £96 difference to your profit or loss.

Northern Rock Example

Let’s say you think that Northern Rock will finish higher than 110.1p by 18-Mar-08.

Therefore you buy at 110.1p for a stake of, let’s say, £10 per penny.

So if, by the closing date, the shares settle at 137.6p, then:

Your profit / loss is worked out by taking the difference between the settlement prices of, 137.6p and the value you bought the spread bet at, 110.1p and then multiplying that by the stake per penny

Profits = (137.6p - 110.1p) x £10 per penny stake.

= 27.5p x £10 per penny stake.

= £275 profit.

But if the market didn’t move as forecast and had Northern Rock shares fallen and closed down at 90.3p, you would have made a loss on this spread bet.

Loss = (90.3p - 110.1p) x £10 per penny stake.

= -19.8p x £10 per penny stake.

= -£198 loss.

Looking for more on Northern Rock spread betting?

Good Luck

DB