The Man Group is in the alternative investment management business, which means that it is principally involved with hedge funds. It is going through a difficult time right now, which gives many opportunities for spread betting on the short side, as can be seen from the chart below of the daily price.
In fact in just the past year the price has fallen well below the 200 level, which was as bad as it had become during the 2008 global economic crisis. Before the crisis, it was as high as 730.
The company was listed in the FTSE 100 until the middle of 2012, but falling values pushed it down to the FTSE 250, where it is now sitting just below the 50th place. The original company was founded in 1783, but at that time it made money by supplying rum to the Royal Navy. In fact this contract lasted until 1970. It also dealt in sugar and other commodities such as cocoa and coffee.
This meant that it was exposed to commodities trading, and the firm became a major market participant. Through the 1970s the markets developed to trade financial instruments, and became more speculative, rather than simply using the commodities markets to hedge their business against risk.
Following this, the company started concentrating on financial services, culminating in the year 2000 with becoming exclusively a financial services company. The brokerage side of the company was de-merged and floated on the US stock market in 2007, leaving Man Group as an investment management company.
Things have not been going smoothly for the company since then. It placed hundreds of millions with the fraudster Bernie Madoff, for instance, as part of its fund of funds. Recently things have been getting worse, making this an exciting opportunity as long as you are careful to protect your spread betting capital by careful position taking and sizing.
Man Group Rolling Daily: How to Spread Bet on Man Group Shares?
Man Group has been on a wild ride in the past year or two, and currently has rumours over its management. As an alternative investment company, the managers are crucial to its success. The current price for a rolling daily bet is 77.11 – 77.49. Say you want to place a bet on the short side, believing that the price will fall further. Perhaps you choose to use wager as much as £10 per point, given that the total point value is fairly small, so your point gain cannot be large.
In the course of time, you might see the price drop to 52.63 – 53.01. If you then close your bet, you can work out your profits quite simply. The bet was opened at the selling price of 77.11, and closed at the buying price of 53.01. That means you have gained 77.11 minus 53.01 points, which is 24.10 points. Multiplying this by your stake, you have come out with a total of £241.
Of course, particularly with a volatile stock, you might find that you have bet in the wrong direction. Say the price went up to 93.29 – 93.68, and you decided to close the bet to cut your losses. The starting price was 77.11, but this time the bet closed at 93.68 which is a loss of 93.68-77.11 points, or 16.57 points. With a £10 per point bet, you would have lost £165.70.
When you do not have time to watch the market, it can be useful to set up a stop loss order when you take out the bet. That way your spread betting provider will close the bet once a certain level of loss is reached. You might find that the stop loss order would have closed your bet at a value of 88.27 – 88.65. In this case you lost 88.65 minus 77.11 points, and the 11.54 points lost would amount to £115.40.
Man Group Futures Style Bet
For spread traders who expect to hang on to their bet for a few weeks or longer, the futures type bet can work out cheaper despite the increased spread which is normally charged by your spread betting company. In this case, the far quarter spread bet for Man Group is quoted at 77.23 – 78.17. Taking an optimistic view of the company, perhaps you would place a long bet for £8 per point.
Considering first what would happen if your bet was a winner, perhaps you close your trade for a profit when the quote is at 105.72 – 106.60. As it was a long bet, it opened at 78.17 and closed at 105.72, giving you a gain of 27.55 points. Multiplying this by your stake, this would amount to a gain of £220.40.
But you might find the price goes the other way, and then you are forced to make a decision when to close the bet to stop any further losses. If you close it when the price drops to 58.93 – 59.75, then your closing price would be 58.93. Taking that away from the opening price of 78.17, you have suffered a loss of 19.24 points. With a bet of £8 per point, your loss is £153.92.
Many traders decide to use a stop loss order to keep an eye on their trades, even if they cannot. The losing trade will be automatically closed by the spread betting provider if it reaches a level they set. This time, the stop loss order might have triggered and closed your spread bet at 63.21 – 64.05. The closing price would be 63.21, the selling price, and as before the opening price was 78.17. That means you have lost a total of 78.17 minus 63.21 points, which is 14.96 points. 14.96 times £8 amounts to a loss of £119.68.