Carillion is a multinational construction and facilities management company, headquartered in Wolverhampton. With definable trends and relatively short candlesticks, as you can see on the daily price chart below, this would be a reasonable spread betting stock for the novice trader.
Carillion came about in 1999, when part of Tarmac Construction was spun off. Tarmac Construction itself was founded in 1903. The company has grown by a wealth of acquisitions. For instance, in 2001 Carillion bought a majority share of GT Rail Maintenance, forming Carillion Rail which today is a division that carries out track renewals on the British rail network.
Various facilities maintenance and construction companies were also acquired, including Planned Maintenance Group, Mowlem, Alfred MacAlpine, and others. A recent less popular purchase was Eaga, an energy efficiency business, which it acquired in April 2011. Looking at a longer-term price chart, you can see a general decline since that time until a turnaround in July 2012, approximately at the left edge of the chart above.
Because of government plans to reduce solar incentives, Carillion announced possible redundancies in December 2011, and this fuelled the downtrend. However, for the past year there has been reasonable growth in the stock price, as you can see from the chart.
In addition to the rail operation mentioned above, Carillion does major construction projects such as hospitals and roads, and provides facilities management services to many clients. It operates mainly in the United Kingdom, but also has interests in Canada, the Middle East, and the Caribbean.
From a betting point of view, the stock has had clear up and down trends which makes for an easily tradable environment, and you can see that there have not been too many surprises in the price, such as gaps, and just a couple of longer candlesticks that would lead to bigger losses or gains. Overall, Carillion would be good for any level of spread trader.
Carillion Rolling Daily: How to Spread Bet on Carillion Shares?
Carillion has a stable price chart, due in part to the fact that some of its work is facilities management which generally continues regardless of the economic climate. If you think that the current uptrend will continue over the next few days, you could place a long or buy bet for £18 per point. The current quote is 314.81 – 316.39.
Suppose that the price goes up to 341.71 – 343.29. It is important that you hold your bet open while it has good prospects so that you maximize your gain, but if you think there is little more profit to be had then you may choose to close it now, and collect your winnings. Your bet was placed at the buying price of 316.39, and you closed it at the selling price of 341.71. 341.71 minus 316.39 is 25.32, the number of points you have gained with this bet. With a stake of £18 per point, your win amounts to £455.76.
While it is important to maximize your gains, it is also important to minimize your losses. Say the price drops down to 298.67 – 300.25, you could choose to cut your losses and close the bet. This time your point loss is 316.39 less 298.67, which works out to 17.72 points. For the stake of £18, your losses total £318.96.
One way you can use to close your spread bet when it is losing is the stop loss order. You do not need to be watching the price, as your spread betting provider will close the losing trade for you automatically. Say with a stop loss order the losing trade closed at a price of 306.74 – 308.32, a little earlier and therefore saving you some money. Working out how much this losing bet cost you, you take the closing price of 306.74 away from the opening price of 316.39, for a difference of 9.65 points. For your chosen stake, this amounts to £173.70.
Carillion Futures Based Bet
With a steady trend, such as you see at present with Carillion, you may be tempted to place a futures style bet expecting to hold this for several months. The quarterly futures bet has no rollover charges, even though the spread may be a little larger than with a rolling daily bet. The current price for the far quarter futures bet is 316.00 – 319.82.
Suppose you have a bullish attitude towards this company, you would want to place a long bet at the buying price of 319.82, staking perhaps £12 per point. You decide to close your winning trade when the quote goes up to 356.35 – 360.17, and your bet closes on the selling price of 356.35. The opening price for your bet was 319.82, and the closing price was 356.35, which means you gained 36.53 points. Multiplying by your stake of £12, this amounts to a profit of £438.36.
But what if the price went down as soon as you placed your bet? With a futures style bet, you can close your trade at any time and get out of your losing situation for a small loss. Perhaps the price went down to 299.86 – 303.68. The closing price this time is 299.86, and taking that away from the opening price of 319.82 you are facing a loss of 19.96 points. With your chosen stake of £12, this works out to a loss of £239.52.
Perhaps you could do better than that. If you had chosen to place a stop loss on this bet, then you would not have to wait until you noticed the price had gone down, your spread betting provider would keep a check on it and close the losing trade for you. With a stop loss order, this might have closed when the quote was 307.93 – 311.75. 319.82 less 307.93 is 11.89 points lost, and that amounts to a financial loss of £142.68.