Spread Betting AMEC PLC
There can hardly be a person who has not heard of AMEC [AMEC.L] or been impacted by its work. It has been around for more than 160 years, and much of that time it was a construction company. In the 21st century, it has been in the process of revising and rediscovering itself, dropping the construction side in 2007 in a sell off to Morgan Sindall, but actively purchasing many other companies. It is now characterized as a consultancy offering engineering and project management services, and centred on oil, gas, minerals, the environment, and infrastructure. It operates worldwide and has offices in 40 countries, though it is headquartered in London.
The move towards clean energy and sustainability was marked by the issue of its first sustainability report in 2002, and the company has been named one of the top five in the world for sustainability of oil and services. It has been heavily involved in the oil industry, working in the North Sea for at least 35 years, but also boasts work on oil sands, one of the latest methods of oil extraction. Other ventures in the engineering field include work in Ontario on a nuclear project and construction of a hydroelectric power station in Québec over a period of 30 years in the 20th century.
But AMEC covers much more than simply oil and energy supply. It is active in the mining industry, with work for Canada’s first diamond mine, and the world’s largest lead zinc mine in Alaska. In fact, half of its work is in North America, with a third in Europe, and the remainder in the rest of the world. It has been increasing its dividend in recent years as it grows by focusing on technologies pertinent to the current day. It is an actively traded stock, and should respond well to spread betting.
AMEC Rolling Daily Spread Bet
AMEC has been a powerful performer in recent years, as it adjusts its operations to more closely reflect the current market for clean energy, environmental responsibility, and greater mining extraction. Here is a recent chart of its price-performance: –
You can see steady growth within the Bollinger Bands, with periodic retracements well signalled by the MACD. With another growth spurt underway, you might decide to place a long bet for £6 per point. The current price is 1140.9 – 1143.1.
If the price continues going up, the target might be 1330, the upper band. If it reached 1315.6 – 1317.8, you could choose to close your spread bet and take your profit. Your long bet was placed at 1143.1, and closed at 1315.6. This means you gained 172.5 points, which amounts to winnings of £1035.
Of course, the price might have come down instead, and perhaps you would have to close your bet and accept your loss when it went below 1060, the centre line (SMA (20)). Your spread trade closes when the quote is 1025.9 – 1028.1.
In this case you lost 1143.1-1025.9 points, which is 117.2 points, for a loss of £703.20.
It is always a good idea to set a stoploss order when you open any spread bet, as it saves you having to watch the movement of the price in case it turns against you. You might have chosen to set a stoploss order 50 points below your point of entry, so perhaps the spread trade would be closed for you by your broker when the price dropped to 1089.6 – 1091.8.
In this case your loss is restricted to 1143.1-1089.6. You lose a total of 53.5 points, which costs you £321. Whenever you can, you should set a stoploss order to protect yourself from major losses, and to save you having to keep your eye on the price throughout the day.
AMEC Futures Spreadbet
The advantage of placing a spread bet on a futures based price is that you do not get charged maintenance or interest charges each day on your account. Against this, you will usually find that the spread is wider so that you need to make a greater number of points before you get into profit. The current quote for a futures style bet just a few months away is 1142.6 – 1147.2. Suppose you believe that the shares will continue to increase in price, and place a long bet for £4 per point.
If you are correct, and the price goes up to 1286.5 – 1290.0, you could close your spreadbet for a win. This is how you work out how much you won. Your spread trade was opened at 1147.2, the buying price, and closed at 1286.5, the selling price. Therefore you gained 1286.5-1147.2 points, or 139.3 points. Multiplying this by your stake, your total winnings are £557.20.
As the markets often don’t go where we want them to, you must also consider that you might lose on this spread bet. Say the price went down to 1033.7 – 1038.2; you could close the trade to cut your losses. In this case you lost 1147.2 less 1033.7 points, and that works out to 113.5. At £4 per point, this wager has lost you £454.
Most spread betters consider that you should have a stoploss order in place to try and mitigate your losses. It simply tells your spread betting company to close the trade if the price goes against you by a certain amount that you decide, say in this case 50 points. If you have a stoploss, the bet might close at 1091.2 – 1095.7. It would not close at exactly 50 points, unless you paid with a higher spread to get a guaranteed stop loss. But in this case you would have lost 1147.2 less 1091.2, which is 56 points. That would be a total loss of £224.
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