Spread Bet on SSE Shares | Trade SSE
SSE is in the energy business. It was formed in 1998 from Scottish Hydro-Electric and Southern Electric, and was called Scottish & Southern Energy PLC until 2010, when a rebranding and change of image took place. In fact some spread betting providers still refer to the corporation under its full name rather than the initials. Scottish Hydro-Electric came from the North of Scotland Hydro-Electric Board as a result of privatization in the 1980s. Southern Electric came from the Southern Electricity Board.
Although the original companies were mainly concerned with electricity generation and supply, there have been many acquisitions over the years which have broadened the energy perspective. In 2008 it bought an Irish wind farm business, and in 2010 it became involved in natural gas exploration and production.
It is currently the second largest electricity and gas supplier in the UK, and is a leader in the renewable energy. There are about 10 million retail customer accounts with SSE for electricity and gas supplies, and the company is the fourth-largest telecoms company in the UK. The company headquarters are in Perth, and the company is registered in Scotland.
This monthly price chart shows price progress of the shares in recent years. The hesitation in the up-trend from 2007 – 2009 reflects the global economic crisis, but since then the price has not resumed any strong overall trends. However, it has possibilities for spread trading, as you can see from the volatility demonstrated. It has shown a clear response to technical analysis, most recently around 2011 when the narrowing of the Bollinger Bands was followed by a breakout upwards following the band. This is also indicated by a crossing on the MACD, shown below.
If you want to spread bet on the SSE share price, you need to apply technical analysis to a much smaller time-scale chart than this one, but it is always a good idea to keep overall trends in mind even when trading on a daily basis.
Spread Betting: SSE Rolling Daily
SSE is in the energy business, and is a leader in renewable energy in the UK. Its current spread betting price for a rolling daily bet is 1327.7 – 1330.3. If you want to bet that the shares will increase in value, you would place a long bet or buy bet at the higher price of 1330.3. You can choose your stake, say £5 per point.
Considering first the case that the price goes up, as you wanted, and that you decide to close your bet and collect your winnings when the price reaches 1452.1 – 1454.5. As it is a long bet, it closes at the lower or selling price of 1452.1. That means you have made 1452.1 minus 1330.3 points, which works out to 121.8 points. With your initial bet of £5 per point, you have won a total of £609.
Now consider the case where the price goes down, against your bet, and giving you a losing position. Sooner or later you will have to decide to close the bet and accept your loss – if you hang on in hope, you could lose far more than you are comfortable with, and even wipe out your account. Say you decide to close your bet when the price goes down to 1232.6 – 1235.0. Once again, the long bet closes on the lower price, in this case 1232.6. Taking 1232.6 away from 1330.3 you get 97.7 points, and that works out to a loss of £488.50.
Many spread traders, rather than watching the markets all the time, use stop loss orders to shut off their losing spread bets. Using one of these, you might find that the spread bet is closed when the price drops to 1260.2 – 1262.8, which saves some of your loss. This time you have lost 1330.3 less 1260.2, which is 70.1 points. For your chosen stake, that works out to a loss of £350.50.
SSE Futures Based Spread Bet
The energy industry, of which SSE is a part, is a vibrant market sector, and constantly developing. The current spread betting quote for a far quarter futures based bet on SSE is 1331.6 – 1343.6. Perhaps you believe that the price will go down in future, and you want to make money from this bet. You would take a short position, placing a sell bet at the price of 1331.6, and staking perhaps £6.50 per point.
If you are right, and the price goes down to 1246.3 – 1258.1, you could close your spread trade and collect your profits. It is easy to work out how much you have gained. Your sell bet was placed at a price of 1331.6, and closed at 1258.1. The difference between these two numbers is 73.5 points. You wagered £6.50 per point, which means you have won £477.75.
However, often the price does not go in the direction that you want it to. Say it went up after you placed the bet, you might find that you have to close your trade and accept your losses when it gets up to 1392.2 – 1401.6. This time the points count against you, and will cost you money. 1401.6 minus 1331.6 is 70.0. Multiplying it by £6.50, you will find that you would lose £455.
There is another way that many spread betters use to close their losing bets before they become too expensive. That is to use a stop loss order, which they place when they open the bet. With a stoploss order, the spread betting company will close the bet for you when it reaches a level of loss that you set, so it saves you having to watch the market all the time. Say the stop loss order closed the bet when it went up to 1369.3 – 1380.2. The starting price was 1331.6, and the short bet closed at 1380.2, a difference of 48.6 points. At £6.50 per point, this would cost you £315.90.
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