Spread Bet British Sky Broadcasting Group
British Sky Broadcasting Group PLC [BSY], otherwise known simply as “Sky” or sometimes BSkyB, is a satellite broadcasting company serving the UK and Ireland. This is a relatively new industry, and BSkyB is at the forefront of it. The company is head-quartered in London, and was formed as recently as 1990 when Sky Television and British Satellite Broadcasting were merged together. Both of these companies were struggling financially, so the merger was a matter of common sense. Arguably, Sky Television had the better programming and BSB had the better advertising contracts. BSkyB currently has more than 10 million subscribers, estimated to represent about 25 million viewers.
It is a large-cap company, with a capitalization of about £13 billion, and Murdoch’s News Corporation (NWS:NDQ) is a major shareholder in the company. In 2010, BSkyB acquired Virgin Media Television and divested itself of its interest in business-to-business telecommunications. However, following the phone hacking scandal surrounding News Corporation in 2011, it dropped its intended takeover. In fact, in 2012 James Murdoch has resigned as chairman of BSkyB. The official reason for this is that he intends to spend more time in the USA, but it is evident that there may have been other influences on his decision.
There is no doubt that Sky is in a competitive environment, and needs to constantly fight for its share of the market, for example by sponsoring sports and obtaining exclusive coverage but few others have sufficiently deep pockets to give it a fight for such rights. The satellite broadcaster competes with the likes of BT for prime football content and the company owns almost all of the live broadcast rights for FA Premier League games. BSkyB is also a force to be reckoned with the broadcasting rights of newly released Hollywood movies as well as controlling the rights to a number of leading TV series which gives the company a degree of pricing power and market dominance.
Simply by looking at the daily price chart you can see the fluctuations in fortune that are being undergone: –
For the spread better, this is an interesting chart representing several opportunities for profit, if you can decipher the latest trends. To some extent, it is a news driven chart and thus if you are not privy to news announcements in advance you may find some difficulty in keeping up. This only serves to emphasize the importance of keeping your losses small and protecting your positions at all times.
Spread Betting on BSkyB
The current spread betting quote for BSkyB on a rolling daily basis is 667.8 selling price, 669.2 buying price. If you think that the price will go up, you could place a long bet for £12 per point at the buying price of 669.2.
Suppose that you are correct, and that BSkyB tracks upward. You should make sure that you do not close your spread bet early, but make a sensible choice about when the upward momentum is slowing, and you should exit your trade. With typical volatility, you might find this happens when the quote reaches 732.1 – 733.5, and you can take your profits by closing at 732.1.
Working out how much you have won, your bet was placed at 669.2 and went up to 732.1, a gain of 62.9 points. As you chose a stake of £12 per point, this amounts to a profit of £754.80. Depending how long you held the spread trade open, there may have been some adjustments to your account each day when the spread bet is rolled over, but this is usually not significant.
You have to realize that even that for experienced spread betters, the trade can go the wrong way and you will need to close your bet for a loss. Say the price went down to 615.9 – 617.3, you could close your bet at 615.9, giving you a loss of 53.3 points from your starting price of 669.2, and therefore a loss of £639.60.
Alternatively, you could have chosen to set a stoploss order when you took out the original bet, and this might close your bet for a loss sooner than waiting for you to notice where the price was going. Say the stoploss order closed your bet when the quote was 632.1 – 633.5, you would have lost 669.2 less 632.1 points, which is 37.1 points or £445.20.
British Sky Broadcasting Group Futures
The satellite broadcasting company known as Sky has volatile pricing. Say you believe that in the long run the price will come down, you may want to place a short or sell bet on the stock. Perhaps you would stake £6 per point at the current quote for the far quarter, which is 669.8 – 677.9. Because it is a sell bet, the bet is opened at 669.8.
If you are correct and the price falls, you could close your bet and collect your winnings when it reaches 610.7 – 617.5. A sell bet closes at the buying price, which in this case is 617.5. That means you have gained 669.8 minus 617.5 points, which is 52.3 points. That is worth £313.80.
Of course, some of the time your bets will not be in the right direction, and you will be faced with closing them at a loss. Say the price went up, and you chose to close it when it reached 703.2 – 710.7. The closing price would be 710.7, so taking away the opening price of 669.8 you find you have lost 40.9 points. For your size of wager, that amounts to £245.40.
What many spread betters do is place a stop loss order when they initially open a spread trade. This tells your spread betting provider to close your bet if it is losing more than an amount you specify, and saves you having to keep an eye on the market all the time. Perhaps in this case you took out a stop loss order and it closed the bet for you when the price reached 686.8 – 693.2.
In this case, your starting price was 669.8, as before, and your closing price was 693.2. That means you lost 23.4 points, which works out to total loss of £140.40.
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