Spread Bet on Severn Trent plc | Trade Severn Trent Shares
Severn Trent plc is a water utility group, one of 10 that were formed in England by a parliamentary act in 1973. It came into being in 1974 as the Seven Trent Water Authority, a state owned water authority, and the name reflected two major rivers in the area served. Subsequently, the government decided to privatize water industries and they were sold off in 1989. That is when it became Severn Trent plc. Being a water authority includes not only supplying fresh water but also treating sewage. It also controls water pollution in the Trent and Severn Rivers.
Previous talk of the group being bought out by a larger rival have quieted down last year due to the state of the European debt markets. That said, Deutsche Bank’s James Brand continues to push the stock, saying that further takeover activity should be expected in the sector more broadly and Severn Trent should not be ruled out.
The head office is in the Coventry, and the company supplies nearly 4,000,000 households and businesses in its area. There are further regulations with which the company must comply, known as the Water Industry Act 1991. Of necessity, it is a heavily regulated industry.
Prior to the establishment of water authorities, there were many Water Boards in the public sector, usually based in major towns or in counties. Piped water systems started in the 18th century in private ownership, but by the 19th century many local governments became involved in their operation. The Water Act of 1973 rationalized the industry, bringing together nearly 200 water supply undertakers and well over 1000 sewage treatment agencies.
You can see that the company was affected by the global economic downturn in 2008, but has more than recovered those losses. Because of the interface between a private company and public needs, there are some issues with profitability and the flexibility of the company to set the economic rate for its services, but the company seems to be on a sound financial footing. From a spread betting point of view, customary technical analysis should yield good results. Currently in an up-trend, short-term opportunities for long bets would have the best chance of profitability.
Spread Betting Severn Trent Rolling Daily
Severn Trent is a privatised water authority, with responsibility for water supply, sewage, and river pollution within its area. The currently quoted spread betting price for a rolling bet is 1712.3 – 1717.7. This means that you can bet on the price increasing from 1717.7, and if you feel bullish about this stock you could wager £6 per point.
Should your wager be correct, then the quote might go up to 1808.9 – 1814.3. Closing the bet at this level, you can work out how much you have made. Your spread bet was placed at the buying price of 1717.7. It closed at the selling price of 1808.9. Taking the difference between these prices, 1808.9 minus 1717.7 is 91.2 points. For your size of wager, that means you have a profit of £547.20.
However, after you had placed your bet you might find that the price falls, and you would be faced with having to close your spread trade for a loss. Perhaps the price went down to 1638.6 – 1644.0 before you managed to close the position. As noted above, your spread bet was placed at the price of 1717.7, and this time it closed at the price of 1638.6. The difference is 79.1 points, and multiplying this by £6 per point, you find you have lost £474.60.
Every time you trade, losses are a problem. It is inevitable that you will suffer some losses, but you want to close a losing bet as quickly as you can to minimize the effect. If you use a stop loss order, sometimes it will close the bet more quickly than if you wait to see where the price is going. Perhaps in this case it would have closed the bet when the price was 1656.8 – 1662.2. The starting price was 1717.7, and this time the bet closed at 1656.8. For your chosen stake, this loss of 60.9 points cost you £365.40.
Severn Trent Futures Style Spreadbet
You should always do some research and analysis before placing a spread bet, as simply guessing which way to bet is bound to lose in the long run. Say you believe that the price of Severn Trent shares is going down from its current quotation of 1723.1 – 1736.1 for the far future spread bet, you might place a short bet for £3.50 per point.
For this example, assume that the price falls, as you have wagered, and when it reaches 1608.2 – 1620.0, you decide to close your spread trade and take your profit. As it was a short bet, it opened at the selling price of 1723.1, and it closes at the buying price which is 1620.0. 1723.1 minus 1620.0 is 103.1 points. You staked £3.50 per point, which means you won £360.85.
Now assume that instead of the price falling, it rose, putting you in a losing situation. At some stage you will need to close your spread trade and accept your loss. Say you did it when the price went up to 1805.6 – 1817.8. For this losing case, your starting price was the same, at 1723.1, but the closing price was 1817.8. Taking one away from the other, you find you have lost 94.7 points. Multiplying by £3.50, the exercise has cost you £331.45.
If you find it difficult to close a losing position, or if you are not able to monitor the price all the time so that you can do so, then you may use a stop loss order which will take you out of the losing bet automatically. If you had done this in the above example, you might find that your losing trade was closed when the price went up to 1772.5 – 1784.3. The bet closed at 1784.3, the buying price. 1784.3-1723.1 is 61.2 points, which for your chosen stake is a loss of £214.20.
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