TUI Travel was formed fairly recently, in 2007, though it can trace its history back to the early part of the 20th century. It is an active price chart, as you can see below, which makes it a good prospect for spread betting provided you take care to protect yourself against losses.
The company was formed when the German business TUI and the English business First Choice Travel merged. It is headquartered in Crawley, in the UK. But it started off in 1923 in Berlin, and was first publicly listed in 1959, on the Frankfurt Stock Exchange. In 2000 it bought Thomson Travel, and in 2002 Hapag Lloyd, a German transportation company which had the travel firm TUI in its keeping, which it decided to use for its new name.
The UK company Owners Abroad was formed in 1973 as a travel agent, and became publicly listed in 1982. It changed its name to First Choice Travel in 1994. The final merger between TUI and First Choice Travel was in 2007.
TUI is now just outside the top hundred shares on the London Stock Exchange, near the top of the FTSE 250. It ranks as the largest tourism group in Europe, with divisions for regular travel, specialist vacations, accommodation, and the emerging markets. Despite its size, you can see from the weekly chart above that the travel industry is prone to volatility. Some of this is seasonal, as might be expected, but factors such as the health of the economy in general affect the travel business.
It is interesting to see how much the price chart has respected the mid- and outer bands of the Bollinger Bands in the weekly chart. Where the response of the MACD may have been lagging too much, and not providing much information for the trader, the Bollinger Bands have set reasonable price targets within which share price has been well behaved.
Tui Travel Rolling Daily: How to Spread Bet on Tui Travel shares?
TUI Travel seems to be in an uptrend, and the current spread betting quote for a rolling daily bet is 251.37 – 252.63. Say you are interested in spread betting on the long side, buying at 252.63 and wagering £10 per point. If the price goes up, you might want to take your profit when it reaches 276.92 – 278.10. You can easily work out how much you gained: –
- The starting price was 252.63
- The closing price was 276.92
- The number of points you gained is 276.92-252.63
- This works out to 24.29 points
- You staked £10 per point
- Your profit is £242.90
On the other hand, if you were wrong and the price fell after you placed your bet, you might find that you have to close your trade for a loss in order to avoid losing any more. Say the price fell to 232.07 – 233.33. This time you must work out how much you lost: –
- The starting price was 252.63
- The closing price was 232.07
- The number of points you lost is 252.63 minus 232.07
- This works out to 20.56 points
- You staked £10 per point
- You lost £205.60
Many spread betters use a stop loss order to avoid losing so much, particularly if they do not have time to watch prices all day long. Your spread betting provider will close your losing bet for you, whether or not you are online at the time. With a stoploss order, you might find that your bet was closed when the price went down to 238.92 – 240.63. Working it out this time: –
- The starting price was 252.63
- The closing price was 238.92
- The number of points you lost is 252.63 minus 238.92
- This works out to 13.71 points
- You staked £10 per point
- You lost £137.10
TUI Travel Futures Based Spread Bet
If you have decided that shares in TUI Travel are going to fall in value over the next few weeks or months, you might decide to place a spread bet on the short side. The current price for the far quarter is 252.15 – 255.19, so you can sell at 252.15 staking perhaps £7.50 per point.
Considering first that your bet works out, perhaps the price will fall to 208.62 – 211.39 and you will decide to cash out your bet and collect your winnings. The bet was placed at 252.15, and you closed it at 211.39, which means you gained the difference, 40.76 points, on your bet. Multiplying this times your stake you find that you have won £305.70.
But sometimes your bet won’t work. In this case you might find that the price increases just after you place your bet, and you must close the trade quickly to cut your losses. Even if in the long-term the shares turn out to be heading down as you surmise, there is a possibility that they could keep increasing, and you cannot take that chance. Suppose you close your bet when the price goes up to 286.31 – 289.18. Your bet was opened at a price of 252.15. The closing price is the buying price of 289.18. 289.18 minus 252.15 is 37.15 points. At £7.50 per point, you would have lost £278.48.
Opinions vary on whether a stoploss order is a good idea, but the principle is sound – your spread betting provider will close a losing bet for you without you needing to keep track of where the price is going. In this case you might find that your bet would be closed with a stoploss order when the price went up to 279.63 – 282.25. Taking the difference again, this time between 252.15 and 282.25, you find you have lost 30.10 points, and that would be a cost to you of £225.75.