Spread Betting on Capita Group Plc Share Price
When you start researching Capita, you will find extensive use of the acronym BPO. This stands for business process outsourcing, and is the fundamental role of the Capita group, which has attained FTSE 100 status with this business model. It involves other businesses contracting specific operations and responsibilities to Capita, who then provide staff to perform the functions needed. The chief advantage for the businesses using Capita’s services is flexibility, and the ability to cope with increased demands without going through the process of taking on additional staff. Some may also claim economies, but this would arise from not taking on overhead costs, as the provision of temporary personnel is usually at a higher rate than that at which full-time staff are paid.
Capita is well-established in many sectors. For instance, 10% of the business comes from central government staffing, an increasingly popular endeavour which allows the government to avoid criticism of over-staffing while still getting the job done. Similarly, 20% of Capita’s business comes from local government staffing. Capita works with the majority of the NHS units, and also services schools and transport. Outside of the public sector, about half of Capita’s business comes from private companies who are wary of taking on full-time staff commitments, while still needing a workforce to deal with current loads.
Capita has grown significantly in recent years. Up until 2007, the stock price was in the low hundreds, but since then it has been around 700, give or take a hundred. Over these years, the stock has traded sideways, with no significant up or down trends. But looked at on a shorter timescale, there are moves that can be traded, using support and resistance levels and trendlines to determine possible targets. The stock is volatile, seeing some odd days where it moves by 50 to 100 points, so you should take care to guard your capital and not overstretch your account with your spread bets.
How to Spread Bet on Capita Group Shares: Rolling Daily
Capita is an outsourcing company that has shown strength in the turbulent economy, but with no significant overall growth in the past few years. The current pricing for a rolling daily spread bet is 747.3 – 749.2. If you choose to bet on the price increasing, you could place a spread bet for £2.50 at the buying price of 749.2.
Consider first that you are correct and the price goes up to 836.1 – 838.0. If you closed your spread bet to collect your winnings, you could work out what they are like this. Your spreadbet was placed at 749.2, and closed at 836.1. Taking 749.2 away from 836.1 gives you 86.9 points. Multiplying by your stake, you have won £217.25. As this is a rolling daily bet, there may have been a few adjustments for interest made each evening when the bet was rolled over, but if the bet was only open for a few days or weeks these will not have been significant.
You must also realize that trading is uncertain, and the price may have gone down after you placed the bet. Say it went down to 683.7 – 685.6, and you closed the trade to prevent any further losses. In this case, your starting price was 749.2, and you closed the losing spread bet at 683.7, which means you lost 65.5 points. At £2.50 per point, this means you lost £163.75.
An alternative way to protect your account from big losses, which is favoured by many spread betters, is to set a stoploss order when you take out the bet. This makes your spread betting company close your bet if you have sustained a certain amount of loss. Say this meant that your bet closed when the price went down to 715.7 – 717.6. This time, you have lost 749.2-715.7 points, which is 33.5 points. For your given stake, this would have cost you £83.75.
Capita Futures Betting
Capita is a large outsourcing company, providing personnel to both the government and private companies. Its current spread betting quotation for a futures based bet on the nearest quarter is 748.0 – 751.0. With a futures based bet you do not have any daily adjustments to your account on rollover, and you can close the spread trade at any time. However the spread is larger than with a rolling daily bet.
If you think that Capita will go down in the next few weeks, you might want to place a short bet for £4 per point at the selling price of 748.0. If you have read the market right, and the price goes down, it you may close it for a win when the quote reaches 685.2 – 688.0. This means that you have gained the difference in points, which is 748.0-688.0, or 60.0 points, and multiplying this by your stake shows you have won £240.
As no one can predict the markets with any certainty, you may find that the price goes the wrong way, and you have to close a losing bet to prevent any further loss. Say the quote goes to 792.7 – 794.7, and you decide to exit the spread trade to preserve your capital. This time you have lost 794.7-748.0, which is 46.7 points. That works out to a loss of £186.80.
In practice, it is usually a good idea to use a stop loss order, which requires your spread betting company to watch the market for you, and close your spreadbet if it is losing. Say that the stop loss order closes in your bet at 776.2 – 778.2, it will have saved you a few points over the example above. Now you would have lost 778.2 less 748.0, which is 30.2 points. That amounts to £120.80.
Join the discussion