Spread Bet on Tate & Lyle
Tate & Lyle is one of the standards of the British food industry. It is multinational, and involved in much more than its familiar sugar and golden syrup markets. In fact, Lyle’s Golden Syrup was sold to American Sugar Refining in 2010, including the well-known Tate & Lyle Sugar name. Later the same year, the global molasses business was sold to W & R Barnett Limited. The monthly price chart below shows that there was little immediate impact on the price of the shares, and if anything the value has been growing since then.
The company was formed from two separate sugar refiners. Henry Tate & Sons started in 1869 in Liverpool, moving to London and founding the Tate Gallery in 1897 from the fortune he made. Abram Lyle was a ship owner who got interested in sugar refining in 1865 in Scotland, and then again in London. Because the two London operations were close to each other, their successors decided to merge in 1921. Both men had died by that time, and would probably not have agreed to the merger as they were bitter business rivals.
Over the years the company developed its brand. In 1949 it introduced the “Mr. Cube” brand in marketing campaign, and in 1976 it acquired a stake in a European starch-based manufacturing business. In 1988 it bought most of a US corn processing business, and in 1998 acquired a citric acid producer.
More recently, in 2004 it worked with DuPont developing a nylon substitute, and went on to form a joint venture to look into bioproducts. Its current speciality products include Splenda sweetener, starches and gums, and dietary fibers. It also manufactures bulk ingredients such as high fructose corn syrup.
For the spread better, you can see that the chart is relatively unexciting, and therefore less risky to trade. Also it has a propensity for established trends rather than less predictable movement.
Spread Betting: Tate & Lyle Rolling Daily
Tate & Lyle is a well-known international agribusiness. It sold off its Golden Syrup and sugar divisions, but is doing well in other areas. The current pricing for a rolling daily bet is 652.8 – 654.2. If you’d like to bet on the price increasing, then you could place a long or buy bet at the price of 654.2. Perhaps you choose to wager £6.50 per point on this spread bet.
For this example, assume that the price goes up as you had wished, and that you decide to take your profits when it reaches 703.6 – 705.0. To work out how much you have won, first you have to figure out how many points you gained. The spread bet opened at 654.2, and you closed it at 703.6, the lower or selling price, as it was a long bet. That means you made 703.6 minus 654.2 points, or 49.4 points. As you staked £6.50 per point, this bet would be worth £321.10.
On the other hand, the price might have gone down after you placed your bet, and then you would have to work out how much you have lost. Say it went down to 615.1 – 616.5, and you decided to cut your losses and close the bet. Your starting price was, as before, 654.2, but this time your bet closed at 615.1, which is a point difference of 39.1. As you elected to place a bet of £6.50 per point on this trade, you have lost £254.15.
As a third example, perhaps you consider placing a stoploss order on the bet, to help you minimize any losses that you incur. With this, the bet might have been stopped by your spread betting company when the price went down to 628.6 – 630.0. The closing price was 628.6, and the opening price was 654.2, meaning that you lost 25.6 points. For your chosen stake, that would have cost you £166.40.
Tate & Lyle Futures Based Bet
If you’re interested in holding a spread bet open for a few weeks or months, rather than hours or days, you might want to place a futures based bet. The current price for the far quarter futures bet for Tate & Lyle is 653.7 – 661.6. If you think that the price will be going down you might want to place a short or sell bet, perhaps staking £8.50 per point.
Should this work out, you might find a price dropping to 592.8 – 600.2, and decide to take your profit. Closing your spread trade at 600.2, the buying price as this was a short bet, you can work out that with an opening price of 653.7 you have made 53.5 points. With a stake of £8.50 per point, your winnings work out to £454.75.
Of course, a number of your spread bets will lose and you need to be prepared for any of them to do so. Perhaps in this case the price went up after you put on your initial short bet, and you decided that you had to close the trade and cut your losses when the price was quoted at 691.3 – 699.1. For this losing case the starting price was 653.7, as before, but the closing price was 699.1, giving you a loss of 699.1 minus 653.7 points, or 45.4 points. This works out to a loss of £385.90.
Whenever a spread bet becomes a loss, it can be useful to have a stop loss order in place, as this saves you having to watch the market all the time, and will close your spread bet at a certain level of loss. Usually the stoploss order is placed when you open the bet. In this case, the stop loss order may have taken you out of the bet earlier, when the price was quoted at 678.2 – 686.0. The starting price was 657.4, and the closing price was 686.0, which is a loss of 28.6 points. Multiplying by £8.50, you would have lost £243.10.
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