Spread Bet on Johnson Matthey
Johnson Matthey is a major international chemical and precious metal company, head-quartered in London. A great deal of its work is with sustainable technologies and environmental matters. It was founded in 1817 by Johnson, who started work as a gold assayer. Matthey joined him later, and the company became Johnson & Matthey.
In the 60s the company got into banking, forming a subsidiary called Johnson Matthey Bankers which became involved in London Gold. During the 80s some unwise loans were made, and the Bank of England organized a rescue package, leaving Johnson Matthey concentrating on its core business.
With the growth of interest in clean air, clean energy, and sustainable technologies, Johnson Matthey has changed over time and now has three divisions –
- Environmental Technologies is involved with catalytic converters for automobiles and fuel cells.
- Precious Metals refines and distributes gold, silver, platinum, palladium, rhodium, iridium, and ruthenium. This fits in well with the catalytic requirements for its auto business. Johnson Matthey is the world leader in platinum distribution.
- Fine Chemicals & Catalysts manufactures other chemical ingredients.
The company is in more than 30 countries, and employs nearly 10,000 people. It has shown strength in adapting to changing marketplaces. There have been legal issues with violations, such as a violation of the US Clean Water Act in 2008 in Utah, but generally the company prides itself on operating cleanly and efficiently. It is an expert in advanced technologies, including low carbon technologies, and in the application and recycling of precious metals.
Johnson Matthey suffered dramatically during the global economic crisis of 2008, with the share price dropping to as low as 640 from over 2000 in April of that year, but recently the price has reached record levels, going above 2400. It is a lively stock, well worth spread betting on.
How to Spread Bet on Johnson Matthey Shares: Rolling Daily
This company is a global specialized chemicals company, involved with catalytic converters and precious metals, and is behaving strongly in recovering from the global crisis. The current price for the rolling daily spread bet is 2267.7 – 2272.3. If you think that the shares will fall in value in the next few days, you could place a sell or short bet on this stock, wagering say £4 per point at the selling price of 2267.7.
If you are correct, and the price does plummet, then you might wish to close your bet and collect your winnings when the price goes down to 2136.2 – 2141.0. Working out what your profit should be, you can take 2141.0 from 2267.7 to get 126.7 points. Multiplying by £4 you get £506.80 as your winnings.
However, frequently you will find that the price does not go in the direction that you want, and that you have to close your spread trade for a loss. Say the price goes up instead of down, and you close your spread bet when it reaches 2347.2 – 2351.6. In this case you have to count the points against you. 2351.6 less 2267.7 is 83.9 points, which at your chosen stake amounts to a loss of £335.60.
Keeping tabs on your spread bets can be difficult, and you only have to miss one or two to find that you have lost much more than you intended. Therefore many spread betters use the stop loss order, which they place when they take out the bet, and which closes a losing bet automatically. If you had taken one of these, depending on the level that you set it might have closed the bet for you when the price reached 2322.1 – 2326.0. Working out your loss now, 2326.0 minus 2267.7 is 58.3 points. Multiplying by £4 per point, you have a total loss of £233.20.
Johnson Matthey Futures Based Spread Bet
The current price for a futures style spread bet for the far quarter is 2280.2 – 2292.2. This expires in seven months, but as with all futures bets you can close it at any time if the outcome would be favourable, or if you need to prevent further loss. Perhaps you think this time that the price will go up, and wager £3 per point at the buying price of 2292.2.
Consider first that you may be right, and that the price might go up to 2442.1 – 2451.7. If you close the spread trade at this level, you can work out how much you have won. The spread bet was placed at 2292.2, and you closed it when the selling price was 2442.1. 2442.1 minus 2292.2 is 149.9 points. If you multiply that times your stake, you find you have won £449.70.
Now you must figure out what you could lose. Perhaps the price went down after you placed your bet, and you chose to close the trade when the price was 2176.0 – 2187.2. The starting price was 2292.2, as before, and this time the closing price was 2176.0, less than the starting price and therefore a loss. The difference between these prices is 116.2 points. At £3 per point, that amounts to a loss of £348.60.
Many spread traders use the stop loss order to control their losses. This requires the spread betting company to close your losing trade when it reaches a level that you specify. Unless you pay extra in a larger spread for a guaranteed stop loss, it does not secure the level that your spread bet is closed, but you should be out of the market at about the level you stipulate. Say you had a stoploss on this bet, and it took you out of the market when the price fell to 2236.1 – 2247.2. Your starting price was 2292.2, and your trade closed at 2236.1. That means you lost 56.1 points, which works out to £168.30.
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