Inmarsat Fundamentals
Inmarsat is a British based international telecommunications company. It has enjoyed relatively stable pricing recently, as can be seen from the weekly price chart below, but in the past it has encountered large moves, and when spread betting on the stock price you need to make sure that you protect your position.
In particular, you can see a gap open in March 2011, a long bearish candle in August 2011, and other lesser swings.
Inmarsat is not simply another telecommunications provider, it is a satellite telecommunications company which offers global mobile services, communicating through 11 satellites. As such, it has performed vital functions for government and aid agencies working in remote regions or disaster areas where there is no reliable alternative.
The company started in 1979 as an international not-for-profit organization, and its full name was International Maritime Satellite Organization, from which its current name was derived. It was set up in conjunction with the United Nations to provide a telephone service for the maritime community, for safety reasons. It started trading in 1982. Because it got involved in aircraft and other portable uses, the full name was changed to International Mobile Satellite Organization, but the acronym remained Inmarsat.
The organization became a private company in 1999, splitting into a regulatory body, IMSO, and the commercial concern of Inmarsat. It was listed on the London Stock Exchange in 2005. There have been several acquisitions and mergers with like companies to create the current corporation. Future plans include global data up to 50 Mbps with a service called Global Xpress which should launch in 2013.
It will be interesting to see the impact of global data on the stock price. Of necessity, satellite communication is more expensive than traditional land-based radio transmitting and receiving, or cable services, but when it is needed there is no substitute.
Inmarsat Rolling Daily: How to Spread Bet on Inmarsat shares?
As a global telecommunications company, it is hard to pigeonhole Inmarsat into a comparable market sector in order to determine where the price may go. This means it is more important than ever to consult technical analysis for spread trading options. The current price for a rolling daily bet is 568.1 – 570.9. Suppose you are bullish on this stock and decide to place a long bet for £7.50 per point.
In this example, imagine that the bet succeeds and the price goes up to 601.2 – 604.0. As it has reached the upper Bollinger Band and momentum seems to be slowing, you decide to close your bet and collect your winnings. The opening bet was placed at 570.9, and it closed at 601.2. 601.2 less 570.9 is 30.3 points, which is the amount that your bet gained. Multiplying by £7.50, your total winnings are £227.25.
However, you will not have been spread betting very long before you realize that many of your bets will not succeed. In this case, you need to accept your loss, close your bet, and move on. Say the price dropped to 545.7 – 548.5, and you cut your losses by closing the trade. The bet was opened at 570.9, as before, and this time it closed at 545.7, a difference of 25.2 points. For your chosen size of wager, £7.50, this amounts to a loss of £189.
Spread betters frequently make use of the stop loss order to take care of closing losing bets. With a stoploss order, there is no need to watch the market as your spread betting provider will automatically end the trade for you. If you had a stoploss order on this spread bet, you might find that it was closed at 554.7 – 557.5. This time, with an opening price of 570.9 and a closing price of 554.7, you would have lost 16.2 points. £7.50 times 16.2 is £121.50.
Inmarsat Futures Based Bet
Taking a longer view of the market, you may choose to place a short bet on Inmarsat with a far quarter spread bet, which is currently quoted at 569.8 – 576.7. Perhaps you would stake £10 per point. Your sell bet would be placed at 569.8, the selling price.
Consider that your bet may turn out to be a winner, with the price falling to a quote of 506.4 – 512.6. You can easily work out how much you won like this: –
- Your bet was placed at 569.8
- Your bet closed at 512.6
- The number of points you gained is 569.8 minus 512.6
- That amounts to 57.2 points
- Your stake was £10 per point
- This means you won £572
No one can guarantee that any individual bet will win, so you must consider the consequences of a loss. If the price rose to 609.2 – 615.8, you may choose to close the bet and cut your losses. This time, the calculation is like this: –
- Your bet was placed at 569.8
- Your bet closed at 615.8
- The number of points you lost is 615.8 minus 569.8
- That amounts to 46.0 points
- Your stake was £10 per point
- This means you lost £460
You might have chosen to place a stop loss order on this bet, which you would do when you opened the position. Although it does not guarantee a maximum loss, the stoploss order tells your spread betting provider to close your trade once a certain level of loss is met or exceeded. Say the stoploss order operated when the price rose to 592.6 – 598.9.
- Your bet was placed at 569.8
- Your bet closed at 598.9
- The number of points you lost is 598.9 minus 569.8
- That amounts to 29.1 points
- Your stake was £10 per point
- This time you lost £291.