Spread Bet on Standard Life plc Shares
Standard Life is a long-term savings and investment business, head-quartered in Edinburgh, Scotland. It employs around 9000 people, 6000 of whom are in Scotland, and it services over 6 million customers in more than 50 countries. Standard Life has many divisions including corporate pensions, benefits, investments, joint ventures, etc., and operates in North America, Europe, and China. The company was originally established in 1825, and was reincorporated as a mutual assurance company in 1925. Standard Life plc has only existed since 2006 when it was demutualised and floated on the London Stock Exchange.
There have been various acquisitions and sales in recent years. Standard Life Bank was set up in 1998, and was sold off to Barclays Bank in 2010. Standard Life Healthcare was developed from an acquisition in 2000, and sold to Discovery Holdings Limited in 2010. But Standard Life bought Focus Solutions Group, a financial software company, in 2010. It appears that Standard Life is trying to reposition its activities. Certainly it is a large concern, with nearly £200 billion under administration for its clients.
The monthly price chart, which starts in 2006 when the company was floated, shows some initial interest at the IPO followed by a settling down to a range of prices. The monthly trading range is about 10% of the value, making this a fairly volatile stock and therefore suitable for more experienced spread traders who may possess the experience to translate the volatility into profit. There is no clear long-term trend at the moment, meaning that trend-based strategies are not appropriate, at least in the midterm, although some trends may crop up on a daily or weekly level that can be traded. Other than that, strategies that are based on prices trading in a range, such as alternating trading between support and resistance, are the types of tactics that you may need to look at.
Spread Betting: Standard Life Rolling Daily
Standard Life is currently trading sideways, with no clear trend up or down, and your strategies need to reflect this as trend trading strategies will not be successful. The current price for a rolling daily bet is 203.80 – 204.20. If you think that the price is going up, you may decide to place a long bet for £25 per point.
If you are correct, the price could go up to 211.65 – 212.05, and you could close your trade and collect your profits. To work these out, you must first see how many points you have made. With a long bet, the trade opens on the buying or higher price, in this case 204.20, and closes on the lower or selling price, which is 211.65. 211.65 minus 204.20 is 7.45 points. With a bet size of £25 per point, you have won £186.25.
The direction of the price will go in is difficult to predict, and the price might have gone down after you placed your long bet. At some stage, you would need to close your bet and accept your loss, and perhaps you did this when the price went down to 198.67 – 199.07. You have lost 204.20-198.67 points, which is 5.53 points. For your chosen stake, that means you lost £138.25.
Many traders use a stop loss order to help them avoid serious losses. The stoploss order, which is normally placed when you take out the bet, tells your spread betting provider to close a losing bet when the quote reaches a certain price level. It does not guarantee the price that the bet will close at, as for that you need to take out a guaranteed stop loss (GSL), but you can usually expect the spread trade to close near the requested value. Say in this case a stoploss order closed your bet for you when it went down to 200.95 – 201.35. The difference between the opening price of 204.20 and the closing price of 200.95 is 3.25 points, which means you would have lost £81.25.
Standard Life Futures Style Bet
The current spread betting quotation for the far quarter futures style bet is 204.07 – 206.54. As the prices are fairly low, you will find that you need to make your bets larger, in order to achieve the level of profit that you usually seek. In other words, even a large percentage change in price will only move the value by a few points. If you believe that the price is going up, you could place a long bet at 206.54, wagering perhaps £30 per point.
If you are proved correct, and the price goes up to 216.73 – 219.13, then you could close your bet and take your profits. The long bet opened at the higher price, and closed at the lower price, therefore you gained the difference between 206.54 and 216.73, or 10.19 points. Multiplying this times £30 you find that you would have won £305.70.
You might easily have been wrong, and the price went down after you placed your bet. Say it went down to 197.36 – 199.64, and you closed your bet to minimize your losses. This time the closing price is 197.36, and the starting price is 206.54, as before. 206.54 minus 197.36 is 9.18 points. For the stake of £30 per point, you find you have lost £275.40.
Many traders find the stoploss order useful. It saves you having to keep your eye on the market, to see when you need to close a losing trade. Your spread betting broker will close your bet automatically if it reaches a certain level of loss. Perhaps in this case with a stoploss order your losing bet would have been closed at 199.86 – 202.14. The closing price would be 199.86, which taken away from the starting price of 206.54 gives you 6.68 points. For your chosen stake, you would have lost £200.40.
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