Spirax-Sarco is a leading company in the field of controls for steam heating and process plants. In fact, for half a century the name has been synonymous with steam controls, and the company offers a comprehensive training for engineers. From a spread betting perspective, you might expect a long-standing engineering company to have relatively little activity in the price chart, but one look at the daily chart below shows that you would be mistaken.
The company was founded in 1888 as an importer of steam traps from Germany. The name Sarco is a shortening of the full original name of Sanders, Rehders & Co. In 1932 it started manufacture in the UK under the brand name Spirax. The company was first listed on the London Stock Exchange in 1959.
It became best known in the 20th century for self-acting steam controls which were first introduced in 1960. It diversified in the controls field by taking over Drayton Controls in 1963, although this was run as a separate business. The building services industry at one time considered steam to be on the wane, due to strict safety regulations, necessary because of the consequence of any leaks. However, steam is also important for many industrial processes, so there was always an underlying market.
Starting in 1990, Spirax-Sarco began diversifying by taking over other companies in the engineering field. In 1990 it bought Watson-Marlow, a pump manufacturer, and in 1993 Jucker Industrial Division, an Italian controls manufacturer. In the 21st century it has taken over M&M International, Mitech Actuators, Proportional Control Technology, and EMCO Flow Systems, all in the control and metering business.
Looking at the price chart above, it must be emphasized that this company is one for experienced spread traders, who are comfortable with the price jumps exhibited and know how to control any losses.
Spirax-Sarco Rolling Daily: How to Spread Bet on Spirax-Sarco Shares?
Spirax-Sarco trades above the 2000 level, therefore you must be careful to adjust your stake so that you do not risk losing too much. Say you decide that the price will be going up, you may choose to bet £7.50 per point when the rolling daily quote is 2233 – 2248.
If you are correct, you may be able to close the bet at a price of 2338 – 2353. As it is a long or buy bet, the starting or buying price was 2248, and the closing or selling price was 2338. 2338 minus 2248 is 90 points, and multiplying this by your stake your profit works out to £675.
With trading, you can never be certain which way the price is going to go, so if it goes against you must be prepared to close your bet and accept your loss before it becomes too large. Say the price went down to a level of 2159.5 – 2174.5 after you placed your bet. As before, your starting price was 2248, and this time your closing price would be 2159.5. The difference between these is 88.5 points, which means you would have lost £663.75.
One of the keys to being successful at spread betting is to minimize your losses, and it is useful to use a stop loss order to help you close a losing trade in a timely manner. It saves you checking the market, because your spread betting provider will automatically close your bet when the price reaches a certain losing level. In this case, the stop loss might trigger and sell your position when the quote went down to 2180.5 – 2195.5. This time the loss would be 2248 less 2180.5, which is 67.5 points. With your initial wager of £7.50, your losses would work out to £506.25.
Spirax-Sarco Engineering Quarterly Futures
For this example, suppose you have a bearish view of Spirax-Sarco over the medium-term. With a quote for the far quarter of 2245 – 2260, you decide to stake £5 per point on a short bet. As this is a sell bet, it goes on at the selling price of 2245.
If it works out for you, you might find that the price drops down to 2087.5 – 2102.5, and you are able to close your bet and collect your profits. The opening price was 2245. You closed your bet when the price was 2102.5. That means that you made 142.5 points. Multiplying this by your stake of £5 per point, you would have won a total of £712.50.
With a futures style bet, you are not committed to hold the bet for any particular time and can keep it open up until the expiry date. However, you may also close it quickly if the price goes against you. Say in a couple of weeks the quote went up to 2371 – 2386, you might choose to cut your losses and end the trade. The opening price was 2245 as before, but this time the closing price is 2386. 2386 minus 2245 is 141 points. 141 times £5 is a total of £705, and that is your loss on the trade.
One of the keys to successful long-term spread betting is to minimize your losses, and it can be useful to take out a stop loss order when you place the bet, as then your broker will keep an eye on your account and close the bet if it is going too far into loss. With a stop loss order, you might find this bet closed at a quote of 2339.5 – 2354.5. The closing price would be 2354.5, and taking away the opening price of 2245 your loss would be 109.5 points. For your chosen size of wager, that amounts to £547.50.