Spread Bet on Smith & Nephew Shares | Trade Smith & Nephew
Smith & Nephew is an international company that manufactures medical devices. Its range of products is extensive, and it is the world leader in arthroscopy products, second-largest producer of wound management products, third for trauma and clinical therapy products, and fourth for orthopaedic devices. It is headquartered in London, with a primary stock listing on the London Stock Exchange and a secondary listing on the New York Stock Exchange.
The company was originally founded in 1856 by Thomas Smith, a dispensing chemist. His nephew Horatio joined the business in 1896, just months before Thomas died, but from that time the company has been known as Smith and Nephew. The business is based on innovation and advanced medical devices, and spends heavily on research and development, as well as acquiring related businesses in recent years.
The company works in three sectors of the medical market. First, it has an advanced wound management division, which makes devices for difficult wounds. The company developed Elastoplast back in 1928, and the technology has increased significantly since then. Secondly, Smith & Nephew produces endoscopy products in its Massachusetts facility, and these facilitate minimally invasive surgery. Finally, hip and knee implants and other orthopaedic devices are developed in its Tennessee branch.
As you can see from this monthly price chart, the stock price held up well during the global economic crisis, but has been fluctuating since and is currently range trading between about 500 and 700. From a spread betting point of view, this price movement is very interesting. You can see that some of the candles and their wicks are long, indicating that the stock price is volatile, which suggests many opportunities for profit on price movement. Whether you can realize that profit depends on how well you can analyse the daily charts, and how well price movements conform to the established principles of technical analysis.
Smith & Nephew Rolling Daily
Smith & Nephew is a long-established manufacturer of medical devices, and with volatile pricing gives the opportunity for large spread betting gains as well as large losses. The current price for a rolling daily bet is 605.4 – 606.6. Assume that after performing analysis, you decide that the price is due to fall, and so place a short bet, selling at 605.4, for £15 per point.
Firstly in this example, say you are correct and that the price drops to 552.1 – 553.3. You could close the spreadbet and collect your winnings. You sold a short bet at 605.4, and this would close at the buying price of 553.3. 605.4 minus 553.3 is 52.1 points. As you staked £15 per point, you would win £781.50.
Secondly, perhaps you were mistaken and the price increased after you placed your short bet. Say the price went up to 649.6 – 650.8. Now you would have to work out how much you have lost. Your bet started at 605.4, and you closed it at 650.8. That is a difference of 45.4 points. For your chosen stake, that amounts to a loss of £681.
Many traders choose to use a stop loss order, so that a losing bet is closed quickly, even if they do not have time to watch the market. You give your spread betting provider a price level at which to close the losing bet, and if the price reaches it then the spread betting company will automatically end the bet. Unless you pay extra (with a larger spread) the price that the bet closes at is not guaranteed, but it will usually be near the price you set. In this case, with a stoploss order you might find that the bet closed at 629.5 – 630.7. Your starting price was 605.4, and the closing price was 630.7. That means you lost 25.3 points, which at £15 per point is £379.50.
Smith & Nephew Futures Style Bet
Smith & Nephew researches, develops, and makes products for wound management, endoscopy, and orthopaedics. The current spread betting quotation for the far quarter futures based bet is 606.2 – 613.6. If you think that the price will increase in the next few weeks or months, you could take out a long bet for £7.50 per point.
If you are correct, and the price goes up, you might consider closing the bet and collecting your profit when the quote reaches 673.9 – 679.8. Your starting price was 613.6, and the bet closed at 673.9, which means you gained 60.3 points. With a stake of £7.50 per point, you have made £452.25.
Many times you will find that your bet does not win. Even the best of spread betters have a number of losing bets. Suppose in this case the price went down to 568.1 – 575.3. You could accept your loss and close the bet, then work out how much it has cost you. Once again, the starting price was 613.6, but this time the spread bet closed at 568.1. 613.6 minus 568.1 is 45.5 points. Multiplying by £7.50, you have lost £341.25.
Many spread traders use stop loss orders on every one of their bets. This means they do not have to follow the market closely, knowing that their spread betting provider will close a losing bet for them if it reaches a certain point. Suppose you used a stoploss order on this bet, you might find that the losing position would be closed more quickly at, say, 581.6 – 587.2. With a long bet, the spread trade closes on the selling or lower price, which in this case is 581.6. With a starting price of 613.6 and a closing price of 581.6, you would have lost 32.0 points. For your chosen size of bet, this would have cost you £240.
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