Online Spread Trading Guide to Speculating on Homeserve Shares 0
Where to Spread Bet on Homeserve
You can trade on spread betting markets such as Homeserve with spread betting companies like:
To see which companies offer 24 hour trading, new account offers, stop losses and trading charts see Spread Betting Companies.
How to Spread Bet on Homeserve
If you are going to spread trade on UK shares such as Homeserve then, on visiting a spread betting website like Financial Spreads on Friday, you may have seen a spread of 252.3p – 253.4p.
That means you could spread trade on Homeserve to increase higher than 253.4p or to decrease lower than 252.3p.
With spread betting, investors trade on every unit the market increases or decreases. In the case of the Homeserve market a unit is 1p of the share’s price movement.
As an example, you could choose to trade £15 for every penny Homeserve rises or falls.
Buying – Spread Betting on the Market to Move Up
If you were to buy Homeserve at 253.4p and the shares rose then the spread could become 259.7p – 260.8p. If that happened, you might decide to close your spread trade at 259.7p.
Your Profits (or Losses) = (final level of the market – initial level of the market) x stake per penny
Your Profits (or Losses) = (259.7p – 253.4p) x £15 per penny stake
Your Profits (or Losses) = 6.3p x £15 per penny
Your Profits (or Losses) = £94.50 profit
The markets can of course fall, if the market decreased to, as an example, 246.2p – 247.3p, you might decide to close your spread bet to restrict your losses. Therefore, you would sell at 246.2p.
You would close your bet with the same £15 per penny stake:
Your Profits (or Losses) = (final level of the market – initial level of the market) x stake per penny
Your Profits (or Losses) = (246.2p – 253.4p) x £15 per penny stake
Your Profits (or Losses) = -7.2p x £15 per penny
Your Profits (or Losses) = -£108.00 loss
Selling – Spread Betting on the Market to Move Down
One major benefit of spread betting is that investors can go short of the markets.
At the beginning of this example, the market was priced at 252.3p – 253.4p.
If you were to sell Homeserve at 252.3p and the shares went down then the spread could change to 243.6p – 244.7p. In that case, you might decide to take your profits by closing your trade at 244.7p.
Your Profits (or Losses) = (initial level of the market – final level of the market) x stake per penny
Your Profits (or Losses) = (252.3p – 244.7p) x £15 per penny stake
Your Profits (or Losses) = 7.6p x £15 per penny
Your Profits (or Losses) = £114.00 profit
The markets can of course rise, if the market increased to, for example, 259.8p – 260.9p, you might decide to close your trade to restrict your losses. If that were to happen, you would buy back at 260.9p.
You would do this with the same £15 per penny stake:
Your Profits (or Losses) = (initial level of the market – final level of the market) x stake per penny
Your Profits (or Losses) = (252.3p – 260.9p) x £15 per penny stake
Your Profits (or Losses) = -8.6p x £15 per penny
Your Profits (or Losses) = -£129.00 loss
Homeserve Rolling Daily prices quoted as of 10-Feb-12.
Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.
