Spread Bet on Smiths Group Shares
The company was founded in London in 1951, and started in the clock and watch business. It became well known in the 20th century when it produced the first British odometer and speedometer. Smiths provided much of the instrumentation for British cars for many years. It is now a global technology company, with operations in more than 50 countries.
The company became known as Smiths Group plc in 2000, and was restructured in 2008 to form five divisions: –
- Smiths Detection which is a sensor manufacturer, identifying explosives, nuclear hazards, chemical agents, and narcotics. The sensors are used in airports and cargo screening, as well as for military purposes.
- Smiths Medical supplies medical devices and equipment, including drug delivery systems.
- John Crane is a separate division, providing products for process industries, including oil, gas, paper, pharmaceutical, chemical, and mining sectors. The sectors include couplings and seals, specialist filtration, and bearings.
- Smiths Interconnect is a technological division dealing with electronic components for signal power and microwave purposes.
- Flex-Tek provides engineering components for the movement of fluids and gases in many sectors.
Despite the fact that the share price shows a downturn in the global economic crisis of 2008, there is also an upturn which may have been caused by optimism in the restructuring undertaken by the company. The share price in 2011 far surpassed previous highs, indicating strong growth, and the subsequent drop was disappointing.
The share price shows a fair amount of volatility and uncertainty, so from a spread betting perspective it would be better for the more experienced trader. However, if you have a solid trading strategy with a good money management system, such a pattern of prices can be profitable. Be sure to maintain a good reward-risk ratio, and to use practical stop loss positions that preserve your funds.
Smiths Group Rolling Daily
Smiths is an engineering and instrumentation company, well-known for its automobile instruments and now in a much wider range of products. The current spread betting price for a rolling daily bet is 999.0 – 1001.0. Should you think that the share price is going up, you could make a long bet for £7.50 per point.
Considering first what happens if the price increases, say the quote goes up to 1095.6 – 1097.6, and you close the bet to collect your winnings. You can work out how much you have won by figuring out the difference in points. For a long bet, the starting price is the higher, in this case 1001.0, and the closing price is the lower one of the second quotation, 1095.6. That means you have won 1095.6 minus 1001.0 points, or 94.6 points. You staked £7.50 per point, so your winning is worth £709.50.
On the other hand, the price may have fallen after you placed your long spreadbet. Perhaps it might have gone down to 923.2 – 925.2 before you closed the trade to prevent further loss. The starting price was 1001.0, as before, and in this case the closing price is 923.2. 1001.0 less 923.2 is 77.8 points. For your size of bet, this works out to £583.50 that you have lost.
It can often work out better to use a stop loss order to protect you from large losses. The stoploss order requires your broker to close your spread bet once the loss reaches a certain level, and it works whether or not you are watching the market prices at the time. Perhaps in this case a stoploss order would have triggered and your spread betting provider close your bet when the quote was 956.7 – 958.7. With the starting price of 1001.0, and the closing price of 956.7, you would have lost 44.3 points. Multiplying that out by the stake, your total loss is £332.25.
Smiths Group Futures Style Bet
Although Smiths Group no longer own the automobile instrumentation division, they have many other areas of interest that are profitable. The current quotation for a futures style spread bet for the far quarter is 1000.4 – 1012.4, and if you believe that the shares will fall in value, then you may want to place a short or sell bet for £5.50 per point. The sell bet is placed at the selling price of 1000.4.
First, if the price falls as you had hoped, you might decide to take your winnings when the price drops down to 915.6 – 926.8. A short bet closes on the higher or buying price, in this case 926.8. Therefore you have gained 1000.4 minus 926.8 points, which is 73.6 points. As you bet £5.50 per point, you would have won £404.80.
Secondly, consider the case when the bet does not turn out as you expect. The shares may increase in value until they reach a point where you decide that you cannot afford to lose any more, and you close the bet and accept the loss. Perhaps the price went up to 1063.7 – 1075.3, and you decided to close the trade. As before the starting price was 1000.4, but this time your spread bet was closed at 1075.3. That means you lost 74.9 points, which for your size of bet costs you £411.95.
To help you succeed at spread betting, you need to keep down the size of your losses so they do not drain your account. You can use the stoploss order for this, which will close your bet for you once it reaches a certain level. If you placed a stop loss order on this bet, you might find that the spread bet was closed out at 1041.3 – 1052.7. The actual price that the bet closed that is 1052.7, so taking off the initial price of 1000.4 you find that you have lost 52.3 points.
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