Premier Oil is an independent oil and gas company, headquartered in London. Typically for this market sector, the volatility will present good trading opportunities for the spread betting enthusiast. You can see recent daily prices on the chart below.
Unlike some of the other oil companies, Premier is concerned entirely with the upstream sector of the industry, covering exploration, and does not get involved in refining and retailing oil. It was founded in 1934 as an oil company working in the Caribbean, and exploiting reserves in Trinidad. It was listed publicly in 1936 on the London Stock Exchange.
However the discovery of North Sea oil and gas off the coast of the UK brought it to drilling in the UK Continental Shelf in the 1970s, and a merger in 1977 included properties in Africa. In the 80s and 90s Premier explored in other countries, such as Pakistan and Myanmar, formerly known as Burma. It also expanded its North Sea presence, and currently has operations in eight countries.
One notable feature of the above chart is the rise in value in July 2012. At that time, Premier negotiated for oil interests in the Falkland Islands, buying the majority of Rockhopper Exploration’s interests, and increasing the share price for both companies. This move was not without contention, some 30 years after the Falklands War and with Argentina still making claims to the “Malvinas”.
From a spread betting perspective, you can see plenty of opportunities in the chart of the previous months, and there is no reason to suspect that this volatility will lessen. Some of the price movements will be driven by news events, such as the Falklands Island’s one mentioned above, and others will be industrywide with the rise and fall of oil prices.
Premier Oil Rolling Daily: How to Spread Bet on Premier Oil shares?
With the typical volatility of the oil industry, you should be careful when spread betting on Premier Oil that you do not risk losing what you cannot afford. However, it also represents good opportunities for profit. The current price for a rolling daily bet is 360.40 – 362.40. If you see the price increasing in next two days or weeks, you might want to place a long or buy bet staking £5 per point.
Suppose you are correct, and the price goes up after you place the bet. In your trading strategy you may have a target price that you hope the stock will hit. Say it does so when it reaches 423.25 – 425.25, and you close the bet to collect your profits. Your bet was placed at a starting price of 362.40, and it closed at 423.25. The difference in points is 60.85, and this is the amount that you have won. 60.85 times £5 amounts to £304.25.
But you may not be correct, and you might find the price falls after you place the bet. Given the nature of the financial markets, you must expect this sometimes. Perhaps you choose to close the bet and accept your losses when the price falls down to 311.60 – 313.60. The starting price was 362.40, as before, and this time the closing price was 311.60, which is a difference of 50.8 points. Multiplying by your stake, this means you have lost £254.
Many spread betters prefer to use a stop loss order when they take out a trade. This takes away the need to be watching the prices all the time, as your spread betting provider will automatically close the bet for you at a certain level of loss. With a stop loss order, you might have found the bet closed at 328.25 – 330.25. This time you have lost 362.40 minus 328.25 points, which is 34.15 points, which would cost you £170.75.
Premier Oil Quarterly Futures Bet
If you want to bet that the price of Premier Oil shares will fall in the next few weeks or months, you could place a short or sell futures style bet. The current quotation for the far quarter is 360.25 – 365.00, and you decide to risk £4.50 per point.
Say that the price falls down to 293.60 – 298.20, and you decide to collect your winnings. Closing the bet at 298.20 from a starting price of 360.25, you would have made 62.05 points. Multiplying by your stake gives you a total profit of £279.22.
If you have been involved with trading for any time, you will know that you cannot predict the markets with certainty, and that you will have your share of losses. Say in this case the price went up after you placed the bet and you closed when the quote was 405.40 – 409.75. Your bet opened at a price of 360.25, and it closed at a price of 409.75. 409.75 minus 360.25 is 49.5 points. For your chosen size of stake that amounts to a loss of £222.75.
As it can be difficult to find time to watch the prices all day long, many traders and spread betters use a stop loss order to guard against losing bets becoming too expensive. The stoploss order tells your spread betting provider to close your bet if it reaches a losing level that you set. It does not guarantee the price that the bet closes at, though you have the option in many instances to guarantee the price by accepting a larger spread, and therefore cost. With a stoploss order, you might find that your bet would have been closed at 392.65 – 397.10. The starting price was 360.25, as before, and the closing price was 397.10. That means you lost the difference of 36.85 points, at a cost of £165.83.