Spread Betting on Carnival’s Share Price
Carnival Corporation and PLC is one of the largest holiday companies in the world, and covers many of the leading recognizable cruise ship brands, such as Carnival Cruise Lines, Holland America Line, P&O Cruises, Cunard Line, and Princess Cruises. The ships can be found around the world, particularly in North America, the UK, Europe, and Australia. It is said that these companies cater for around 8 1/2 million guests annually.
The company is head quartered in London and in Miami, Florida, and operates around a hundred ships. The company was started by an American, Ted Arison, in 1972 with a single second-hand ship. While Carnival Cruise Lines was formed in 1972, it did not become Carnival Corporation until 1999. The initial IPO happened in 1987. Much of the expansion, and the different brands came from purchasing other companies. Carnival merged with P&O Princess Cruises in 2003 to become one of the largest leisure travel companies in the world.
Carnival is known for its ability to brand the separate divisions of its Corporation, with each of the cruise lines keeping separate sales marketing and reservation offices. There is no doubt that it was a major setback in January 2012 when one of the ships ran aground off the coast of Italy, resulting in multiple deaths. The impact on the shares can be seen clearly on this daily chart: –
However the company has bounced back, though not quite to the level preceding the accident.
This accident is an example of how a single highly unlikely incident can have a catastrophic effect on a company’s share price. It is a clear demonstration of the need for diversification, as unlikely events happen from time to time, and you do not want to be caught out by such a misfortune. It is difficult to guard against such an exceptional occurrence, but diversification also counters many other less extreme circumstances.
How to Spread Bet on Carnival Shares: Rolling Daily
The current price for a rolling daily bet on Carnival PLC is 1977.0 – 1981.0. Before placing a spread bet, you should do your best to analyse the chart using technical analysis so that the odds favour your trade. Perhaps you have considered this stock and decided that it will continue to go up in value. If the risk/return is favourable, you may choose to place a long bet for £3.15 per point at the buying price of 1981.0.
If all goes well and the stock price rises, you may decide to close your bet and collect your winnings when the price goes up to 2092.6 – 2096.6. This is just below a previous resistance level, and therefore may be the end of the trend. Although your spread betting company will work out your winnings for you, it is useful to be able to check them. The number of points that you have gained is 2092.6 less 1981.0, which is 111.6. Multiplying by your stake, you have won £345.96.
Many beginners struggle with the fact that they have a number of losing spread bets. This is normal, even with the best of traders, and you simply have to make more with the winning bets than you lose with the losers. Say the price of Carnival PLC drops down to 1906.2 – 1910.2, and you close your bet to hold your losses. You have lost 1981.0-1906.2 points, and 74.8 points times £3.15 gives you a total loss of £235.62.
Rather than deciding on the spur of the moment when to close a losing spreadbet, many traders use stop loss orders to set the level in advance. If you had used a stoploss order on this spread bet, it might have closed at 1935.8 – 1939.8. You lost 1981.0 less 1935.8, which is 45.2 points and at your stake amounts to losses of £142.38.
Carnival Futures Based Bet
If you want to take the slightly longer view with a spread bet on Carnival Cruises, then you may be interested in the futures based bets, which are available for near, midterm, and far quarters. The current quote for the mid term quarter, which at the time of writing expires five months away, is 1982.7 – 1994.7. If you are buying shares directly, that is nearly £20 per share. But if you spread bet, say £5 per point, you can profit as if you had bought 500 shares. Say you staked £5 per point for the price to go up.
If the price goes up, you could sell when it reaches 2067.5 – 2078.6, for instance. You would profit by the number of points times your stake, which is 2067.5 minus 1994.7 times £5, or £364. You have to be careful though because if you lose, the amount you lose is also multiplied. Say the price drops down to 1937.2 – 1948.9, the amount you lose would be 1994.7 less 1937.2, which is 57.5 points times £5, which is £287.50.
One of the secrets to successful trading in the long run is to accept that you will have losses, and to make sure that they never become drastically large. You need discipline to close a losing trade rather than hang on to see if it “turns around”, which some will perversely do, but others can decimate your account. You should look at using a stoploss order, which automatically closes your spread bet without you having to make a difficult decision, once a certain level of price is reached. Say you had a stoploss order on this bet, and it closed your position when the price fell to 1951.6 – 1962.0. In this case you would have lost 1994.7-1951.6 points, which is 43.1 points. Multiplying by your stake, your total loss is £215.50.
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