Spread Betting Unilever | Trade Unilever
Unilever plc is a successful company, originally founded more than 100 years ago as Lever Bros. It has expanded over the years, mainly by acquisitions, and the big change to being called Unilever happened back in 1930. The original goal was to spread cleanliness and hygiene, to contribute to general health and lessen work for women, and this is still the direction in which Unilever operates today. Unilever’s products help with household chores, and allow people to take care of themselves.
Unilever has about 400 brands, although most of its profit is made from about a dozen of the most popular lines. It is a British-Dutch company (the Uni- comes from a Dutch company named Margarine Unie) dealing in consumer goods, and is the third-largest such company in the world, based on revenues. It also ranks as the world’s largest maker of ice cream, and includes the American Ben and Jerry’s line in its products. On the FTSE, it ranks as the 18th largest company by capitalization.
Its fundamentals are strong, and although the price took a dip in 2008 along with most other companies, it was trading at a higher price than before by the end of 2009. With that said, it is trading in a competitive market, and while it is increasing its dividend it faces stiff competition from market leader Proctor and Gamble, and from Nestlé. It anticipates a fall in profits, particularly as rising prices have forced it to increase prices which has discouraged sales.
So while Unilever is in a long-term uptrend, there are retracements in its price chart which can also be a source of profit for spread betting. The best overall advice is to bet with the trend, as this increases the probability that your bet will be a winner. However, if you look at the chart on different time scales you will see that you can identify both uptrends and downtrends, so the advice has to be applied to the timescale that you intend to spread bet on.
When you are spread betting, you should always look at the technical analysis on the short-term chart to identify a likely place to enter your trade. If you time this correctly, and can make a profit within a couple of days, then well and good; but if it takes longer to turn into profit, you do not want to be on a short-term opposite trend that may force you to close your bet for a loss before the price turns around.
If you are considering spread betting on Unilever, then it is a good idea to print out a few charts on different time scales, and with a pencil try to identify support and resistance levels. Frequently the price will return to a previous level and stall there, so this will give you a target prices for your bets. You should also remember that support and resistance can change places – once support is broken, it may become resistance for the price coming back up, and vice versa.
Spread Betting on Unilever
Unilever is in the fast moving consumer product business, selling personal care products, and household goods. It is a competitive market sector, which means that prices can fluctuate, but as Unilever is one of the largest companies it is well placed to continue to compete. The current spread betting quote for Unilever is 2067.9 – 2072.1.
First of all, here is an example of a long bet. A long or buy bet goes on at the higher of the two quoted prices, in this case 2072.1; and when it is closed, the lower price of the pair is used. Say you bet £12 per point on a buy bet at 2072.1. If the price goes up, you might consider closing it when the quote goes to 2189.3 – 2193.5.
You can work out your profit from this bet by multiplying together the points and the stake. The bet was placed at 2072.1, and it closed at 2189.3. That means you gained 117.2 points. For your stake of £12 per point, that works out to a profit of £1406.40.
It is just as simple, though not so pleasant, to work out how much you have lost if your bet goes the wrong way. Say the price fell to 2036.7 – 2040.9, and you decided to close your bet and accept your loss. In this case you open the bet at 2072.1, and it closed at the selling price of 2036.7. That means you lost 2072.1-2036.7, or 35.4 points. Multiplying this times £12 means you have lost £424.80.
There is an important lesson to be drawn here. Some of the time, your bets will lose. Whenever they go into a losing position, and you decide that they will probably not turn around, you must close them quickly to minimize your loss. You should always know how much your bet is losing, and never hang on to it in hope, when the losses are becoming too great.
For a second example, look at a short or sell bet. You might stake £8.50 per point on a short bet, and this would be placed at the price of 2067.9, the selling price. Assuming you are right the price could fall to 1986.6 – 1990.9, and you might close your bet and take your winnings.
In this case the spread bet opened at 2067.9, and closed at the buying price of 1990.9. That means you gained 77.0 points. Your stake this time was £8.50 per point, which means you have come away with £654.50.
If instead of going down the price started going up, you should have a level in mind at which the losses would become too great, and close your bet before you reach it. If the reason for making the bet in the first place goes away, then you can close the bet even earlier. Say the price went to 2085.1 – 2089.3, and you closed the bet to limit your losses.
Your bet went on at 2067.9, and closed at 2089.3. That means you lost 21.4 points. Multiplying by your stake, you have lost a total of £181.90.
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