Spread Betting on Compass Group’s Share Price
Compass Group PLC is a food service company headquartered near London and operating in 50 countries worldwide. It came into being in 1941 with the name Factory Canteens Limited, and has always been associated with commercial catering. Employing nearly half a million people, it is reckoned to serve about 4 billion meals a year in a variety of locations such as factories, schools, hospitals, universities, major venues, and other places.
Compass Group was formed in 1987 following a management buyout, and it was listed on the London Stock Exchange in 1988. The last decade has seen a variety of dealings, including a merger and de-merger with Granada PLC designed to strip the catering interests from that company, separating them from the entertainment side. At one stage, Compass owned many motorway service areas, but these were sold off in 2006. The company made several acquisitions in 2009 in the USA and in Germany.
The company owns many brands and businesses which would be familiar to the consumer, including Trattoria Pizza, Levy Restaurants, Mondo Subs, and many others. It has established a firm hold on hospitals and institutional catering, and is also known for catering at major sports events. The price chart reveals significant growth in the last few years, and a pattern of uptrends followed by consolidations: –
How to Spread Bet on Compass Group: Rolling Daily
The Compass Group is a mass catering company which has shown good growth in recent years. The current price for a rolling daily spread bet is 647.9 – 650.1. If you think that it is going to continue upwards, you could place a long or buy bet at 650.1, staking say £15 per point.
Assume for a moment that you are correct, and that the price goes up to 685.6 – 687.8. If this is as far as you expect it to go, you could choose to close your bet and take your winnings, and the amount is easy to calculate. Simply work out how many points you have made from the opening price of 650.1 to the closing price of 685.6 – this is 35.5 points – and multiply by your stake of £15 per point to find that you have won £532.50.
Whenever you are trading on the financial markets, you should expect that you will lose some of your spread bets. Say the price went down after you placed your bet, and you chose to close your spread trade and cut your losses when it reached 619.6 – 621.8. You can work out how much you lost in exactly the same way as before. The bet went on at 650.1, and it closed at the selling price of 619.6. 650.1-619.6 equals 30.5 points, which works out to £457.50.
Many spread traders use stop loss orders to “watch the market” for them. A stoploss order will close your spread bet once it reaches a certain level of loss, whether or not you are paying attention. Say the price dropped to 627.2 – 629.4 and your bet closed on the stoploss order. This time your losses have been contained. 650.1 less 627.2 is 22.9 points. Multiplying by your stake of £15 per point, you find you have lost £343.50.
Compass Group Futures Based Spread Bet
If you’re looking for a spread bet to last for several weeks or months, then you may choose to place a futures based bet. These are available with expiry dates on future quarters, which saves you having the daily bet rolled over each day. The current price for Compass Group for the far quarter, which is eight months away, is 650.6 – 658.9. Suppose you think that the price is due for another retracement, you could place a short or sell bet on this security for £5 per point. As it is a sell bet, it goes on at the lower price, which is 650.6.
Over the next few weeks, you watch as the price steadily recedes. When it reaches 592.6 – 597.2 you decide that it has gone as far as it is going to, and you close the trade to take your winnings. Your spread betting broker will tell you how much you have won, but it is easy enough to work it out for yourself. Your bet went on at 650.6, and it closed at 597.2. That gives you a difference in points of 53.4. At £5 per point, you have won £267.
Of course, the price could have gone up instead of down, and you would be faced with having to close your bet for a loss simply to avoid any further loss to your account. Say the price went up to 695.8 – 702.6, and you closed the bet. The number of points you have lost is 702.6 less 650.6, which is 52.0. At your chosen stake this would cost you £260.
You might have put on a stop loss order when you opened the bet, which could take you out of the losing trade earlier. Say it closed your spread trade when the price reached 682.1 – 688.6. You would have lost 688.6-650.6, or 38.0 points, which is worth £190.
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