If you have ever heard of Cussons Imperial Leather soap, then you know the main product of the company PZ Cussons. You can see from the chart below that recent months have shown a marked uptrend in the stock price, and when spread betting it is always useful to have a clear trend on which to trade.
The company started in 1879 in Sierra Leone. At that time it was known as Paterson Zochonis after the surnames of its two founders. It was a British owned company and expanded into the Nigerian market prior to the 20th century. However, there was significantly more expansion in the 20th century, including into Ghana and Kenya. It was also one of the major companies operating in Guinea in its colonial days during the first half of the 20th century.
It was later, in 1975, that the company bought Cussons Group, acquiring the now famous name. The company has always been international, and expanded into Asia with offices and factories, building a factory in Thailand in 1986. It bought some formerly state-owned companies from Poland in the 90s, and finally, in 2002, changed its name from Paterson Zochonis to PZ Cussons plc.
It has a host of other brands apart from Imperial Leather, including Joy soaps, Pearl soaps, Duck Laundry Soap, Jet detergent, and other shampoos, etc. Controversially, in 2005 Cousins closed its Nottingham factory relocating its operations to Thailand. The company remains headquartered in Manchester.
You can see from the chart above that there has been a period of sideways trading, at least at this time scale, and therefore little opportunity for the spread trader. However, from the middle of the chart there has been a noticeable upward trend, well marked by the MACD. Current indications are that another upwards trend may be forming, with the Bollinger Bands narrowing and the MACD lines looking ready to cross, but it is a little early to commit to any particular opinion.
PZ Cussons Rolling Daily: How to Spread Bet on PZ Cussons Shares?
At the time of writing the direction of the share price of PZ Cussons appears indeterminate, but for the sake of example we will assume that you believe the price will fall, and are prepared to place a bet of £14 per point on that conjecture. The current price for a rolling daily bet is 365.08 – 367.62.
Suppose after a few days or weeks the price goes down as you have foretold, until it reaches a level of 348.63 – 351.17. You could close your bet and collect your winnings. If you did, your bet would have opened at 365.08, the selling price, and closed at 351.17 which is the current buying price. 365.08 minus 351.17 works out to 13.91 points. Multiplying this by your stake of £14 means that you have won £194.74.
The price might have gone up after you placed your short or sell bet, and you would be faced with closing your bet for a loss before it moved too far. Say you closed your short bet when the quote went up to 374.95 – 377.49. With the bet opening at 365.08, as before, it now closed at 377.49 giving you a loss of 12.41 points. For your wager size, this would work out to a loss of £173.74.
Many spread betters decide to use a stop loss order so that they do not risk missing a big change in price which would cause them to lose too much. The stop loss order requires your spread betting provider to close your bet when a price level you set has been reached. In this case a stop loss order might have closed your bet at 371.66 – 374.20, which would give a point loss of 374.20 less 365.08, which works out to 9.12 points. In this case your loss would be kept down to £127.68.
PZ Cussons Futures Style Bet
For an example of a futures style bet on PZ Cussons, assume that you decide the price is going up and want to place a long trade on the far quarter futures bet. The far quarter, currently about nine months away, is quoted at 366.49 – 371.62. Perhaps you decide to stake £9 per point on your buy bet.
If the price goes up as you expect, you might find that you can close the trade and collect your profit when the quote is 391.17 – 396.30. Your long bet was placed at the buying price of 371.62, and it closes at the selling price of 391.17. To work out how much you have won, simply take 371.62 away from 391.17, for a total of 19.55 points. Multiplying this by £9 gives you £175.95, your profit on this trade.
On the other hand, if the price goes down after you place your bet you may choose to cut your losses and quit the trade when the quote is 353.33 – 358.46. That means that your closing price is 353.33, which taken away from the opening price of 371.62 means you have lost 18.29 points. For your chosen size of wager, this works out to a loss of £164.61.
Even though this futures style bet does not expire for nine months, it is important to remember that you can close it at any time if you decide you should to prevent further loss, or if you want to capture your profits. You should also consider placing a stop loss order on every bet you take, as this means you do not have to watch the price all the time, your spread betting provider will take care of closing a losing trade for you. In this case a stop loss order might have closed your trade at 358.27 – 363.40. With an opening price of 371.62 and a closing price of 358.27, your loss with a stop loss order would be 13.36 points, and with a £9 stake that works out to a loss of £120.24.