Spread Bet on Land Securities Group
Land ownership. With what you know about real estate values now, you might think this was one of the worst businesses to be in. But Land Securities Group is in the top 100 shares on the London Stock Exchange, as evidenced by its presence in the FTSE 100. Here is a monthly price chart.
You can see that the price has plummeted from well above 1800 to a low of under 300 in 2009, and has settled around the 700 level.
Land Securities Group is the largest commercial property company in the UK, and converted to a REIT (Real Estate Investment Trust) in 2007, when this form of company was permitted in the UK. It specializes in commercial property, owning, developing, and managing offices, shopping centres, and retail parks. This is a different type of business from that with which you may be familiar, the housing market, and it responds differently to market pressures. The value of a commercial property is heavily based around the incomes and expenditures associated, so the amount that can be charged for commercial rent is one of the driving factors. When High Street businesses are doing well, retailers can afford high rents, and conversely when people are not spending money in the shops, you will notice that the number of commercial properties fall vacant.
The company was formed in 1944, and from 1947 concentrated on commercial property. In 1971 it sold off some foreign investments and concentrated on the UK market. It now owns and manages more than 2,700,000 m² of commercial property, and this is valued at nearly £9 billion. If anything, the shares are underpriced for this current valuation. Land Securities brings a lot of experience to the markets, which it perceives as two sectors, the retail portfolio and the London portfolio, because of the distinct differences in running properties in both areas. The price chart is unexciting, but this has potential as the economy improves.
How to Spread Bet on Land Securities Group Shares: Rolling Daily
The current price for a rolling daily spread bet on Land Securities Group is 716.8 – 718.2. The market seems very flat, with barely 40 points covering the low and high prices each month. If you think that the share price will go up, you could stake £11 per point at the buying price of 718.2. If you are correct, you might choose to close your bet and take your winnings when the price goes up to 765.6 – 767.0. The long bet closes at the selling price of 765.6.
Working out what you have won, the difference between 765.6 and 718.2 is 47.4 points. You chose to stake £11 per point, which means you would have won £521.40. Even though the price did not move much, because of the size of your stake you still finish up with a decent profit. Your spread betting company may have charged a little interest each evening when they rolled over the bet, but usually this is not very significant.
Of course, you may have been wrong and the price might have dropped after you placed your spread bet. If this is the case then you should choose to cut your losses and close the bet before the price drops too far. Say the price dropped to 681.3 – 682.7, and you closed your spread trade. The spread bet was still placed at the buying price of 718.2, but this time it closed at the selling price of 681.3, giving you a loss of 36.9 points. This time the size of bet works against you, giving you a loss of £405.90.
Some spread traders choose to limit their losses by placing a stoploss order when they open the bet. This requires your spread betting company to close a losing bet for you once it reaches a certain level. If you had done this, the bet might have closed at 695.6 – 697.0. In this case you have lost 718.2 minus 695.6, which is 22.6 points. Multiplying by your stake, you have lost £248.60.
Land Securities Group Futures Based Bet
If you’re not concerned with the day-to-day fluctuations of the stock market, but prefer to take a midterm look over weeks or months, then you may be interested in a futures style spread bet. The mid-quarter futures bet on Land Securities Group, which expires in four months, is quoted at 717.4 – 723.2.
Taking a pessimistic view of commercial property and of this share price in particular, you could place a short or sell bet for £8 per point. Assuming you are correct, you might see the price drop to 652.7 – 657.6, at which time you decide that you have made the maximum gains and close your spread bet. Your starting price was 717.4, the selling price as this was a short bet. The closing price was 657.6, the buying price. That means you have gained 59.8 points. Multiplying this by your wager, you have made a total of £478.40.
Any time you make a financial trade or bet, you must expect that it may fail. The markets are not wholly predictable, and even winning traders have their share of losses. Perhaps the price in this case would have gone up to 759.6 – 763.9, and you would have closed the bet to cut your losses. Once again you can work out how much these are. The opening price was 717.4, and you closed your short bet at 763.9. If you ever get confused which price to use, just remember it is the one that is the worst for you – because your spread betting provider makes a profit from the difference. In this case you have lost 46.5 points which for your chosen stake is £372.
Another way to close a losing bet is to place a stop loss order when you take it out. If you had done that in this case, you might find that the spread bet was closed at a price of 746.1 – 751.3. You would have lost 751.3 minus 717.4, which is 33.9 points. That works out to a loss of £271.20.
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