Bellway is a major residential property developer, headquartered in Newcastle upon Tyne. You can see from the daily price chart below that there is a fair amount of volatility and both up and down price movement, which means spread betting on the shares could be profitable, if you are cautious.
The company was founded in 1946, and first called John T Bell & Sons. It started as a housebuilder in Newcastle, but the family diversified into commercial property in the 1950s with another company called North British Properties. In 1963 North British took over John T Bell.
One of the reasons for the company’s success at this time was the demand for private housing following World War II. While the major push was in the north of England, the group also moved into the southeast of England by acquisition of Searles. There was some international involvement, but this was abandoned as it did not prove successful.
The housing side of the business was de-merged from the company in 1979, becoming “Bellway” under the leadership of Kenneth Bell, one of John Bell’s sons. However, he faded away from direct control and died in 1997. The company has done fairly well considering the housing market’s recent performance. The shares more than halved in value during the global economic crisis, and have still not attained the levels of 2007, but they have been coming back steadily in the last couple of years.
For trading, you can see from the daily chart above that there are definable trends that are captured by the MACD and may be tradable. The narrowing of the Bollinger Bands in October was followed by a breakout upwards, and the November slump was clearly marked by the MACD reversal. December shows a more steady upward progression that may be sustainable, as it mirrors the uptrend that can be seen on the monthly price chart.
Bellway Rolling Daily: How to Spread Bet on Bellway Shares?
Bellway is in the turbulent field of residential property development, and as such presents good opportunities for spread betting profits from either up or down movements, depending on the current climate. The rolling daily bet is currently priced at 1039.4 – 1044.6, so suppose that you place a long bet on the stock, with a stake of £7 per point.
As a first example, assume the price goes up to 1104.4 – 1109.6, and you decide to lock in your profits by closing the bet. The shares opened at 1044.6, the buying price, and closed at 1104.4, the selling price. That means that your gain is 1104.4 minus 1044.6, which is 59.8 points. You chose to stake £7 per point, so this works out to a profit of £418.60.
Secondly, consider a losing position. Perhaps the price fell down to 1000.4 – 1005.6, and you decided to accept your loss and close the bet before you lost anymore. With an opening price of 1044.6, and a closing price of 1000.4, this time you would have lost 44.2 points. Multiplying 44.2 times £7, your total loss works out to £309.40.
The other way that you might exit a losing position is by taking out a stop loss order when you place the bet. If you do this you do not have to keep watching the market, as your spread betting provider will close out the losing bet for you when it reaches a level that you set. If you had used a stop loss order on this bet, you might find that the position would be closed when the quote was 1019.9 – 1025.1. The starting price was 1044.6, as before, and this time the bet closed at 1019.9, giving you a loss of 24.7 points. With a wager of £7 per point, this multiplies out to a loss of £172.90.
Bellway Futures Style Bet
You should be careful to perform detailed technical analysis on every bet that you place. Even though this trading is called spread betting, it should not be viewed as gambling, and you can minimize the amount of chance by careful selection of your bets. The far quarter futures style bet is currently priced at 1043.6 – 1055.6. Say you decide to place a short bet for £6 per point.
For the sake of example, assume firstly that you have a winning position, with the price going down to 946.1 – 958.1. Your bet was placed at the selling price of 1043.6, and it closes at the buying price of 958.1. 1043.6 minus 958.1 is 85.5 points, the amount that your bet has gained. Multiplying by the stake of £6 per point, this works out to a profit of £513.
With the financial markets, you can never be sure which way the price will go, and a winning strategy is one which minimizes your losses while maximizing your gains. That means you need to close a losing position quickly, as soon as you realize it is not going to work out. Perhaps the price could go up to 1082.6 – 1094.6, and you decide to cut your losses. With an opening price of 1043.6, your bet closed at 1094.6 for a loss of 51 points. Multiplying this by £6, your total loss in this bet would be £306.
Many spread traders use the stop loss order to protect themselves from large losses. Even if they cannot watch the markets, their spread betting company will close a losing bet for them once a certain price level is reached. In this case, a stop loss order might have closed your losing trade at 1063.1 – 1075.1. The closing price would be 1075.1, so taking away the opening price of 1043.6 you would have lost 31.5 points. For your chosen size of wager, this amounts to £189 lost.