Spread Betting Hammerson | Trade Hammerson Shares
Hammerson PLC is a real estate investment trust (REIT), which means it has special tax arrangements in return for high payouts to its shareholders. The company concentrates on investing in shopping centres and offices, and most of its properties are in the UK, although it has properties across Europe in France, Spain, and Germany.
As you would anticipate from the market sector, the company has had a turbulent few years as can be seen in this monthly price chart: –
From a peak of around 1200 the value of the shares went down to below 200 (£2 per share), and has a long way to go to reach previous levels. However from the short candles on the chart, you can see that the volatility is not too great.
The business was founded in 1942 by Mr. Hammerson, who started by converting houses into flats. In 1948 the company turned to the commercial property sector, and it became listed in 1953. In the 60s it moved outside the UK, looking for properties in Australasia and the United States, areas which it has since abandoned. In the 1970s it got involved in European countries. It is responsible for some of the largest shopping centres in the UK.
REITs were only introduced to the United Kingdom in 2007. These reduce or eliminate Corporation tax, but in return the company must distribute 90% of its taxable income to the investors. It is basically a parallel to the mutual fund model which invests in stocks and shares. Of course, following the introduction of REITs the property market was hit hard by the global economic recession, so the advantages of REITs have not been realized as was hoped. This has left many early opportunity investors with significant losses. From a spread betting viewpoint, the price chart is reasonably stable and this is a suitable sector for beginners as well as experienced traders.
How to Spread Bet on Hammerson Shares: Rolling Daily
Hammerson is a Real Estate Investment Trust which should make it a favourite amongst investors looking for good returns and special tax treatment. The property crisis has unfortunately taken away some of the enthusiasm for this sector. The current rolling daily price for the shares is 410.59 – 411.41.
If you think that the price will climb, you may want to place a long or buy bet on the shares, staking perhaps £15 per point. Should you be correct, you might find that you can take your profit when the price goes up to 442.63 – 443.45. Your winnings you can work out by figuring the difference in number of points. Your bet went on at the buying price of 411.41, and closed at the selling price of 442.63. That means you made 31.22 points for a total profit of £468.30.
Of course you may have bet in the wrong direction, and the price might go down after you have placed your trade. In this case you may need to close your bet and cut your losses when the price reaches, perhaps, 386.72 – 387.58. Working out how much this has cost you, the starting price was 411.41 and the bet closed at 386.72. That means you lost 24.69 points which was worth £370.35.
Many spread traders decide to use a stop loss order on every bet that they make. As this tells the spread betting company to close a losing trade automatically, it saves you watching the market. It is important to note that an ordinary stop loss order simply tells the spread betting broker to close the bet, and this is done at the market price, so there is no guarantee how much you will lose. Say you used a stoploss order on this bet, and the trade automatically closed at 395.32 – 396.21. Your losses would have been limited to 411.41-395.32, which is 16.09 points, so you would have lost £241.35.
Hammerson Futures Style Bet
For the longer-term trade, you may consider making a futures style bet. The current price for these shares is 410.79 – 412.44 for the near quarter, expiring in a couple of months. If you think that the price is going down, then you could place a sell bet for £12.50 per point.
After a few weeks, perhaps the price has dropped to 386.72 – 388.51, and you can close the bet and collect your winnings. The bet was placed at a price of 410.79, and it closed at 388.51, a difference of 22.28 points. At £12.50 per point, your winnings amount to £278.50.
It would be wrong to think that you can always spot the winning bets. Even winning traders can lose up to and sometimes more than half of their bets, making a profit by keeping their losses small and clocking up big gains. If the price went up after you had placed this bet, you might close it when it reached 425.76 – 427.52. Your loss is worked out in the same way as your gain. The difference in points is 427.52 less 410.79, which is 16.73 points. Multiplying this by your stake, you would have lost £209.12.
Another way to keep your losses in control is to use the stoploss order. You place this when you take out the original bet, and it tells your broker to close your spread trade if it goes against you by a certain amount. You do not need to keep checking the price yourself. If you had done this in the above case and the stop loss order had closed your bet at 420.01 – 421.79, you would have lost 421.79 minus 410.79 points, or 11.0 points. Your losses would have been limited to £137.50. Note that an ordinary stop loss order does not guarantee the price at which the bet will close.
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