Spread Bet on Kazakhmys | Trade Kazakhmys Shares
The company with the Kazak…name originally hails from Kazakhstan, as you might have guessed. It is now headquartered in London, with its subsidiary, Kazakhmys Corporation headquartered in Kazakhstan. It is a copper mining company which originally started in 1930, and operates both open and underground mines along with smelting and refining plants. It was listed on the London Stock Exchange in 2005, and recently had a secondary listing in Hong Kong.
As you can see from this monthly price chart, the stock has been fairly turbulent. The large dip in 2008 and 2009 is because of the global economic crisis, but the company has been having its own crisis recently with miners going on strike and having a sit in. As this mine is in Kazakhstan, it is difficult to get any news. However, the chairman, Vladimir Kim, who became a billionaire when the company went public, has now volunteered to step down when a successor is found.
It appears that Kim will remain as a director, and also retain his share of ownership in the company, rumoured to be around 28%. The Kazakhstan government also owns 26% of the company. Spread betting on one of the slew of companies from the former Soviet Union that were listed on the London Stock Exchange is a risky business, and one in which you must pay particular attention to your stop loss orders to protect yourself from major losses.
In fact, given the unknown political nature of this company you may consider that this is one of the cases where a guaranteed stop loss order (GSL) would be a wise precaution, guaranteeing as it does to limit your loss regardless of how crazy the price goes. It is usually assumed that the additional cost in the wider “spread” for a GSL is an unnecessary overhead, but in some cases it might be worth your while to sacrifice some potential profit for peace of mind.
How to Spread Bet on Kazakhmys Shares: Rolling Daily
So you want to spread bet on Kazakhmys, the copper mining and refining company from the old Soviet Union? Looking at the chart, it is a great choice for those who can handle dramatic price moves, and probably a trap for a beginner. The current price for a rolling daily bet is 736.3 – 737.7. If you think the price is on its way up, you could take out a long bet for £5 per point. With a rolling daily bet, your account will be charged a little bit of interest each night when the bet is rolled over, but this is usually not a problem unless you hold onto the bet for several months.
Assuming that you are correct, and the price goes up, you might decide to close your bet and collect your gains when the quote goes up to 815.6 – 817.0. To work out how much you have made, you have to figure out the difference in points. The bet went on at the buying price of 737.7, and would have been closed at the selling price, which was 815.6. The difference in points is 77.9. Multiplying this by your stake of £5 per point, you find you have won £389.50.
Quite possibly you got the bet wrong, and the price fell after you had put on your wager. Say it dropped to 683.9 – 685.3, and you decided to close your spread trade and accept your loss. The starting price was 737.7, as before, but this time the bet closed at 683.9. That means you lost 53.8 points. At £5 per point, that amounts to £269.
Finally, you might have decided to place a stop loss order when you took out this bet, to protect yourself from losing too much if it went down. Perhaps the stoploss order would have closed your bet for you at 698.3 – 699.7. In this case your spread trade closed at 698.3, down from the opening price of 737.7, and losing you 39.4 points. That would have cost you £197.
Kazakhmys Futures Based Bet
You may be attracted to this stock given the volatility of this ex-Soviet Union company, but you need to be especially careful if you’re thinking of a futures style bet because you foresee holding onto the position for a time. The current spread betting price for the far quarter is 737.7 – 746.6. Perhaps you consider that the stock is overvalued, given the industrial unrest, and decide to take a short or sell bet for £8 per point.
If you’re right, the price might drop down to 667.2 – 676.1, and you could close the bet to collect your winnings. Your spread betting company would work out for you how much you have won like this. The price at which you opened the bet was 737.7, and the price at which you closed it was 676.1. The difference, 737.7-676.1, is 61.6 points. At £8 per point that amounts to £492.80 winnings.
However, even if you have the direction of the general trend right, you might find that the volatility of the price takes it up so high before the drop that you are forced to close the bet to protect your capital. Perhaps the price went up to 789.2 – 797.6, and you decided you could not wait and see if it turned around for fear of losing more. The opening price was 737.7, and the spread bet closed at 797.6, a difference of 59.9 points. This means a loss of £479.20.
Many spread traders use a stop loss order to automatically take them out of a losing trade when it reaches a certain level. This means that they do not have to watch the market all the time to contain their losses. Perhaps with a stop loss order this bet might have closed earlier, at a price of 763.7 – 765.3. In this case, the closing price for your spread trade is 765.3, and with the opening price of 737.7 you would have lost 27.6 points. Your chosen stake of £8 per point means that you lost £220.80.
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