MITIE is a strategic outsourcing and energy services company, including facilities and property management. The daily price chart below shows that generally there is little volatility making for a mundane but relatively less risky spread betting environment, even though there was a sharp dip in price in November, which seems to have been based on a reduced earnings report on 19 November.
The group started as MESL in 1987, and was listed in this form on the London Stock Exchange in 1988. The next year it merged with Highgate & Job and was renamed the MITIE Group. The name stands for Management Incentive Through Investment Equity, and this idea is followed through by the managers owning a fair proportion of the company.
The company has expanded by acquisition, and at the same time enhanced the services that it can provide. It took on Initial Security in 2006, and in 2007 acquired Robert Pretty & Company which brought specialist plumbing heating and mechanical services into the property services division. Further acquisitions since then have enhanced its facilities management expertise. MITIE has even entered the health and social care sector by acquiring Enara, a homecare firm, in October 2012.
The company works by taking 51% stakes in startup businesses in its field of expertise. Provided that profit targets are met, the management of the new business may be able to sell the remaining business to MITIE, called an “earn out”. Often the management stays on to run the company having received a nice capital payout.
For a trading point of view, the candlesticks are relatively short and the shares are not volatile. However, as you can see the earnings report had a marked effect on share price, and if you are not prepared for it the effect could have been catastrophic if you had an open bet. Unless you know what you’re doing, is often a good idea to stay away from trading around this time.
MITIE Group Rolling Daily: How to Spread Bet on MITIE Group Shares?
The current quote for a rolling daily bet on MITIE Group is 266.63 – 267.97. With the rolling daily bet, if you take a long position your account may be charged each night when the bet is rolled over. Provided that you do not intend holding the bet open for several months, this is usually not a significant amount compared to the amount you win or lose.
For an example of a spread bet, assume that you are bullish on this company, that is you expect the share price to rise, and you place a long bet for £40 per point. If this bet is successful, you might find that you can close the trade and collect your winnings when the price goes up to 275.53 – 276.87. Your bet was placed at 267.97. You closed it when the price went up to 275.53. That means you have gained 275.53 minus 267.97 points, which works out to 7.56 points. With a stake of £40 per point, you would have won £302.40.
If you have been trading for any time, you will know that many of your trades do not work out, and the key to making a profit overall is to close losing trades quickly before the losses mount up. In this case, suppose the price went down to 262.18 – 263.52 and you close the spreadbet to cut your losses. This time the closing price is 262.18, so taking that away from the opening price of 267.97 you will find that you have lost 5.79 points. At £40 per point, this multiplies out to £231.60.
The other way to close a losing trade is to have a stop loss order, which you place at the same time as you open the bet. With a stop loss order, this trade might have been closed by your spread betting provider for you when the price was 263.96 – 265.30. 267.97 less 263.96 is 4.01 points, so you would have lost £160.40.
MITIE Group Quarterly Futures
If you have a longer-term view of a share price, you may choose to place a futures bet, avoiding the rollover costs of a daily rolling bet. However, even with a futures style bet you can close the position at any time you decide to. The current quote for a far quarter bet on MITIE is 267.61 – 270.84. Say you stake £25 per point on a long bet, which would go on at 270.84.
First, assume the price goes up and you decide to close the trade when the quote is 280.96 – 284.19. Your trade would close at the selling price of 280.96. That means you have gained 280.96 less 270.84 points, which is 10.12 points. If you multiply this by your stake of £25, your profit works out to £253.
Secondly, if your bet is a loser you might find that you would close your trade when the price is 263.16 – 266.39. This time your trade closes at the selling price of 263.16. Taking this away from the opening price of 270.84, your loss is 7.68 points. With a £25 stake, that means you would have lost £192.
Many spread traders use the stop loss order in order to keep control of their losses. With a stop loss order, your spread betting provider will close your bet for you once a certain level of price that you set is hit. It does not guarantee what price the bet closes at, because it simply becomes a market order to close the bet when triggered, but usually you can expect the bet to exit close to the value you set. In this case, it might close at 264.94 – 268.17, giving you a loss of 270.84-264.94 points. As this works out to 5.90 points, your £25 stake makes this a loss of £147.50.