Spread Betting Antofagasta
If you look up Antofagasta [ANTO.L] online, you might find that it is a Chilean port city, a province, and a region in Chile. For obvious reasons, this is the origin of the company Antofagasta plc, which is listed in the FTSE100. It has a market cap of ҄£12 billion, which means that it is between the thirtieth and fortieth largest companies in the London Stock Exchange. The city of Antofagasta is a major mining area, and has the highest GDP of any place in Chile.
Antofagasta plc is mainly centred on copper mining, with a Chilean railroad interest from Antofagasta to Bolivia and some involvement in water. In fact, it was listed on the LSE in 1888 for the railroad operation, and it was nearly one hundred years later that the mining in Michilla, Los Pelambres, and El Tesoro was included in the company. It is looking at expanding its operation to include exploration in North America, Asia, and Africa. The company has become one of the major copper producers in the world, and improved its copper production from half a million tonnes in 2010 to 700,000 tonnes the following year.
Here is a recent chart of the weekly prices for Antofagasta. It is a mining company, so you would expect that there would be volatility and, as you can see, it does not disappoint. Even so, you can also observe that many of the technical analysis principles that you should be familiar with apply. The MACD crossings give signals of trend changes, and the Bollinger Bands tend to encompass 95% of the pricing, with due hesitation of the price when it crosses the central SMA(20) line. As always, you should take care to limit your exposure when spread trading on this security, but the volatility also allows you to enjoy some worthwhile gains.
Antofagasta plc Rolling Daily
Antofagasta is a Chilean based mining company, which means that it will typically be volatile in pricing. The current price for a spread bet is 1127.9 – 1130.1, and it normally shows 40 to 60 points range each day. So say you are feeling bullish on this stock, having examined the price chart, you could place a spread bet for £1.50 per point at the buying price of 1130.1.
Suppose over the next week the price continued to rise until it reached 1226.3 – 1228.5. If you see signs that the uptrend is failing, you could close the bet and work out your profit like this. Your long bet was put on at 1130.1, and it closed at 1226.3. That means you gained 96.2 points. As you bet £1.50 per point, your winnings are £144.30. It is likely that your spread betting company has charged you a little bit each evening when the bet is rolled over to the next day, but this usually does not amount to much when you are holding a spread bet open for just days.
The other thing that could have happened to your long bet is that the price went down, until you decided that you had to close the spreadbet and accept your losses. Say the price went down to 1056.2 – 1058.4 and you closed your bet. The number of points that you have lost is 1130.1-1056.2, which is 73.9. This time your losses work out to £110.85, and again you may have been charged a small amount each evening to roll the bet over.
If you do not want to manually keep a check on a losing situation, you can place a stop loss order to automatically close the bet if it is losing. You can set the level you want, and perhaps this would close your bet for you when it dropped to 1102.6 – 1104.8. In this case your losses have been limited. You lost 1130.1 less 1102.6 points, or 27.5 points, which amounts to £41.25.
Antofagasta plc Futures Style Bet
If you want to take a relatively long-term view, that is several months, on the price of Antofagasta plc, then you may want to take a futures style spread bet to avoid the daily charges of a rolling bet. The current price for the third quarter is 1132.4 – 1144.4. Perhaps you expect the price to go down, and decide to place a sell bet for £3 per point. This goes on at the selling price of 1132.4.
Suppose your short spreadbet succeeds, and you decide to close it and cash in when the price reaches 1026.2 – 1037.3. In this case, you were betting for the price to go down, and it went from a selling price of 1132.4 down to a buying price of 1037.3, a difference of 95.1 points. That works out to a profit of £285.30.
Mining stocks are very volatile, and you may find that the price rises so high that you need to close your bet for a loss. The price may drop in the end, as you anticipate, but you should not take that chance and face a bigger loss. Say you close the bet when the price is quoted at 1215.6 – 1226.2. You have lost 1226.2 less 1132.4 points, which is 93.8. At your given stake, this amounts to £281.40.
As an alternative, you could and possibly should have set a stoploss order with your spread betting provider, to automatically close the position if the loss exceeds, for example, 50 points. If you did this, you might find that it closed your spread bet at a level of 1183.6 – 1195.4. The stoploss order becomes a market order once it is triggered, so you get the price that is then quoted.
You opened your spread trade at 1132.4, and it closed at 1195.4. You have lost again, but this time it is 63 points which amounts to £189.
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