SEGRO is a property development company and real estate investor, and is organized as a REIT (Real Estate Investment Trust), a company configuration which was introduced to the UK in 2007. A REIT saves Corporation tax, but a condition of this designation is that at least 90% of the profits are paid out to investors. Real estate has been particularly variable in the last few years, so you should be able to find some good spread betting opportunities with this company. Looking at the daily chart below, there are several defined trends up and down that would have been eminently tradable.
If the name SEGRO seems unfamiliar, it is because this name was only adopted when it attained REIT status. Prior to that, the company was known as Slough Estates, and has always had Slough in the name since its foundation in 1921 as The Slough Trading Company Limited.
The company was formed to acquire and develop the site which is now called the Slough Trading Estate. In 1931 it took on a site near Birmingham, and in the 1980s expanded by several acquisitions. However, the named Slough Estates was used from 1926. The emphasis has been on developing business space, usually adjacent to populous towns. It has some developments in Europe as well as in the UK.
SEGRO is the largest industrial property company in Europe, and its original property, The Slough Trading Estate, is the largest trading estate in Europe under single ownership. SEGRO has always taken responsibility for managing its commercial properties, rather than contracting out that task, and the total valuation of the company’s portfolio is in excess of £4 billion.
When you have trends, such as those exhibited in the chart above, that last for several weeks, then it is comparatively simple to trade “with the trend” and make profits while the trend continues.
SEGRO Rolling Daily: How to Spread Bet on SEGRO Shares?
Suppose you see signs of an uptrend developing in the share price of SEGRO, with the indicators showing that it is oversold and the price coming back up from support. You might place a rolling long spread bet on the stock, for which the current quotation is 224.84 – 225.96. Perhaps you would stake £10 per point.
Over time you might find that the price goes up to 253.76 – 254.88, and decide to close the bet and collect your winnings. Your bet was placed at the buying price of 225.96. You closed it when the selling price was 253.76. That means you gained 253.76 minus 225.96 points, which works out to 27.80 points. With a wager of £10 per point, it is easy to see that you have won £278.
However, you will have a share of losing bets, as that is the nature of trading on the financial markets. Assume that the price went down instead of up, and you decided to cut your losses and close the bet when the price was quoted at 201.32 – 202.44. The same starting price of 225.96 applies, but this time your bet closed at 201.32. 225.96 less 201.32 is 24.64 points, so you would have lost £246.40.
Another way that many spread betters prefer to deal with the inevitable losers is to place a stop loss order when they take out the original bet. That way, if the price goes in the wrong direction the spread betting provider will close the bet even when the spread better did not follow the market. Suppose in this case you had placed a stop loss order, and that caused the trade to be closed at a price of 210.10 – 211.22. This time you would have lost 225.96-210.10 or 15.86 points, which would amount to £158.60.
SEGRO Quarterly Futures Bet
For the spread better looking to hold a bet open for a few weeks or months, the futures style bet can work out more cheaply. It is important to note that with this bet you are not locked into any particular length of time, as you can close the bet whenever you want; but it allows you to hold the bet open until the expiration date without any rollover adjustments being applied to your account.
The current price for a far quarter futures bet on SEGRO is 225.33 – 228.05. Taking a bullish stand, you might decide to wager £8 per point on a long bet. The bet would be placed at the buying price of 228.05. Suppose that the price went up to 287.69 – 290.44, and you closed the bet for a win. The closing price would be 287.69, the selling price. Therefore you have gained 287.69 minus 228.05, or 59.64 points. For your size of wager, that would work out to a win of £477.12.
If the price didn’t go your way, you might find that you needed to close the bet anyway to cut your losses. Perhaps you would do this when the price dropped down to 178.34 – 181.01. The closing price would be 178.34. With an opening price of 228.05 your loss would be 49.71 points. Multiplying by £8, this works out to £397.68.
If you had used a stop loss order, you would not have needed to keep an eye on the market and you might find that your bet would be closed earlier, saving you some money. With a stop loss order, say that your bet closed at 192.36 – 195.02. Your closing price would be 192.36, which you should take away from the opening price of 228.05 to find that you have lost 35.69 points. For your chosen size of stake, that would amount to a loss of £285.52.