Spread Bet on Reed Elsevier Shares | Trade Reed Elsevier
Reed Elsevier is a publisher and information provider, formed from the amalgamation of Reed International, which produced trade books and magazines, and Elsevier, a Dutch company publishing scientific material. The origins go back to the 19th century, with Reed being established in 1894 as a newsprint manufacturer before merging with the International Publishing Corporation (IPC) in 1970. You may have seen the name IPC Business Press on trade journals and magazines. The company is listed both on the London Stock Exchange and as Reed Elsevier NV in Holland.
The Dutch publishing company Elsevier was founded even earlier, in 1880, and first published literary classics and an encyclopedia. It specialized in scientific and educational publishing. As you can see from the chart below, this company has not been stable in recent years. There have been criticisms that the trade and business publishing is priced too expensively, and there has even been a boycott suggested, on the basis that such materials should become open access.
As you can see the chart, which is a weekly price chart, has many ups and downs and the candle lengths are reasonably long, indicating a good range of trading prices in the week. In some ways this indicates a company that is in trouble, but for the spread better or trader who is prepared to deal with the uncertainty of the chart, it represents opportunity for profit.
Reed Elsevier has several divisions through which it runs its operations. There is an exhibition section, called Reed Exhibitions, and the company owns the well-known Lexis-Nexis brand. Reed continues to publish business information including magazines such as the New Scientist and Variety, and Elsevier is responsible for science and medical publishing. There have been many acquisitions and disposals in recent years, each of which will have an impact on the share price so you need to keep an eye on the news.
Spread Betting Reed Elsevier Rolling Daily
Reed Elsevier is a scientific and business information publisher, and with a volatile price presents good opportunities for the spread better. The current quote for a rolling daily spreadbet is 490.51 – 491.69. After some consideration of the technical analysis, you might decide that the price is going down, and choose to place a short or sell bet for £7.50 per point on this stock.
If the price goes down as you anticipate, then you can close out your winning position when the quote reaches, say, 469.26 – 470.34. Working out how much you have won, you note that your starting value was at the selling price of 490.51, and your spread trade closed at 470.34. The difference in points is 20.17, and at £7.50 per point that means you have won £151.27.
You should be prepared for the price to go in the wrong direction for any spread bet that you place, and suppose in this case the price went up to 506.23 – 507.45, at which point you decided to close the bet and accept your loss. Your starting price was 490.51, as before, and this time the bet closed at 507.45. 507.45 minus 490.51 is 16.94 points. For your chosen stake that works out to a loss of £127.05.
One of the lessons taught by experienced spread traders is that you should cut your losses quickly, as soon as you realize that the bet has failed. Keeping down your losses and maximizing your gains gives you the most chance of making a profit overall. Many spread traders use a stop loss order to take them out of the market in the event of a losing position. Suppose in this case a stoploss order closed your bet when it reached 499.05 – 500.36. The number of points you have lost is 500.36 less 490.51, or 9.85 points, and that would have cost you £73.87.
Reed Elsevier Futures Style Bet
The futures style bet is based on the next three quarters, when it expires. However, you can always close a futures style bet as soon as you need to. The current price for Reed Elsevier for the far quarter is 492.04 – 498.18. The spread is larger than for a daily bet, but there are no ongoing charges such as you have with the rolling bet, so if you expect to hold the bet for a few weeks or months it will usually work out cheaper.
Suppose you think that the price will go up, you could place a long or buy bet at 498.18 for the amount of £8 per point. If you are correct, you might find that you can close the bet for a win when the price is 536.92 – 542.13. The bet closes at the selling price of 536.92. That means that your spread bet has made 536.92 minus 498.18 points, which is 38.74 points. Multiplying by your stake, you have won £309.92.
On the other hand, the price might have gone the wrong way and you would be left facing a loss. It is best to keep your losses down, but you might not have closed the spread trade until the price was 468.31 – 474.23. 498.18 less 468.31 is 29.87 points, which would have cost you £238.96.
Many spread traders choose to use a stop loss order whenever they place a bet, as this takes them out of a losing position near a level they designate even if they are not watching the market. Using one of these, perhaps your losing spread bet would have been closed at 477.63 – 483.35. Once again, the initial bet was placed at 498.18, and this time it closed at 477.63, a point difference of 20.55. Multiplying by your stake, you have lost £164.40.
Join the discussion