BTG (BTG) is in the potentially lucrative sector of healthcare and is the UK leader in the quoted biotech space. While the candlesticks on the daily price chart below are fairly short, indicating little volatility, you can see that the price is fairly erratic, so before spread betting you need to form and test a workable trading strategy.
The origins of BTG go back to 1948, when the National Research Development Corporation was formed for the purpose of commercializing research innovations that came from a public projects. The National Enterprise Board established in 1975 was designed to move public-sector work into commercial progress price. The two groups merged together in 1981 to form a new body called the British Technology Group, which primarily licensed and commercialized publicly funded research results
In 1991 the government formed it into a statutory body by passing the “British Technology Group Act 1991”, but it was still owned by HM Treasury. The next year, there was a management buyout organized by Cinven, a private equity firm, and the company was finally floated on the stock market in 1995. The acronym BTG was formally adopted in 1998.
The life sciences development and interventional medicines company has has come a long way since the last decade. In 2004 the company was an intellectual property development and technology commercialisation enterprise running at a loss of about £23 million a year. Louise Makin was then appointed CEO and she has helped turn round the business into a life sciences development and interventional medicines company. The healthcare company now boasts a market valuation of about £1.3 Billion and employs almost 600 employees worldwide.
One of the major developments that BTG can lay claim to is magnetic resonance imaging (MRI) technology, and the company licenses it to many parts of the world, including General Electric and Philips, for their production. BTG has also developed some cancer treatments including prostate cancer treatment Zytiga as well as in the area of blood clots. Nowadays, BTG is heavily involved in research for liver cancer and for the treatment of varicose veins, using the revenues from sales of its own products and from royalties. The company is also looking at taking on the Chinese market with its drug-eluting bead products, which are designed treat cancer with the need for massive doses of chemotherapy.
A look at the longer time frame of a monthly chart shows that there has been a general uptrend all the way from 2009, but with a strong retracement in July /August 2012. As the healthcare industry is dependent on research outcomes and government regulation for approval of drugs, there will always be times when expectations are not met, and this is reflected in the stock price. This particular retracement was due to the failing to produce any improvements of a product being tested by AstraZeneca.
BTG Rolling Rolling Daily: How to Spread Bet on BTG Rolling Shares?
As mentioned, pharmaceutical companies are subject to market reactions, either from successful or failed testing and research, so when spread betting you need to be sure that you are not overstretched. The current price for a rolling daily bet on BTG is 339.05 – 340.75, and you might decide to place a long bet for £16 per point.
If the price goes up, you could take your profits when the quote reaches 361.05 – 362.75. That means you would have made 361.05 minus 340.75 points, or 20.3 points. The size your stake, £16, reflected the fact that the price is relatively low compared to other stocks, and that therefore the number of points expected to be gained is also low. Multiplying 20.3 times £16 works out to a profit of £324.80.
But as the price could also fall, the size of your stake can work against you. Say the price fell to 325.85 – 327.55. With a starting price of 340.75 and a closing price of 325.85, you have lost 14.90 points. For your £16 stake, that amounts to a loss of £238.40.
One of the keys to successful spread betting is to make sure that your losses are small relative to your gains. Many spread traders use a stop loss orders so that their bets are not too expensive, even if they cannot find time to watch the markets. The stop loss order closes the losing bet for you at a level you set in advance. In this case a stop loss order might have closed the trade at 332.45 – 334.15. As before, the starting price was 340.75, but this time the trade closed at 332.45. This is a loss of 340.75 minus 332.45 points, which is 8.3 points. With your stake of £16, this multiplies out to a loss of £132.80.
BTG Quarterly Futures Style Bet
The price for a far quarter futures style bet on BTG is currently quoted at 340.33 – 344.43, and the spread of 4.1 points is significantly more than the spread on the rolling daily bet. However, if you think you are going to hold the bet open for several weeks or months, then it can still work out cheaper to use a futures style bet, as you have no daily rollover charges.
This time, say you expect the price to go up and place a long bet with a stake of £9 per point. Your buy bet goes on at 344.43. If over the course of time the price goes up, you might find that you can close the bet and collect your profit when the quote is 373.33 – 377.43. Your bet will close at the selling price of 373.33. The total amount you made is 373.33 less 344.43 points, or 28.9 points. Multiplying this by your stake of £9 per point, your profit is £260.10.
Should the price go down rather than up, you may have to close your losing bet when the quote is 327.13 – 331.23. With an opening price of 344.43 and a closing price of 327.13, your loss is the difference, 17.3. 17.3 times £9 works out to £155.70 lost.
If you do not have time to watch the markets, it can be convenient to use a stop loss order, which is usually placed when you open your bet. The stop loss order makes your spread betting provider close a losing trade for you if/when it reaches a level you set in advance. If this triggered, you might find that your spread bet was closed at 333.73 – 337.83. 344.43 minus 333.73 works out to a 10.7 point loss, so at £9 per point, this bet would have cost you £96.30.