Rentokil Initial has been around for more than a century, and is widely known for its pest control activities. The daily price chart below shows consistent growth without too much volatility, so this could be a suitable stock for a beginner to spread betting.
Initial was started in 1903 as a towel rental company, which had the then unique feature of each towel being marked with the customers’ initials, so the customers only received their own towels. In 1928 this company was floated on the stock market.
Rentokil was originally founded in 1925 by an entomologist, Maxwell-Lefroy, as a result of his investigations since 1920 into ways to kill death watch (wood-eating) beetles. He produced a pesticide fluid which he originally wanted to call Entokill, as entomon is Latin for insect. In 1925 he registered the name Rentokil Limited instead, because of trade name objections. Lefroy died later that year from inhaling poisonous fumes, and the company was taken over by his assistant.
In turn, Rentokil was bought by British Ratin in 1957, changed its name to Rentokil Group in 1960, and became listed on the London Stock Exchange in 1969. In 1985, BET (British Electric Traction) took over Initial, and Rentokil in turn took over BET in 1996 in a hostile takeover.
In the 21st century Rentokil has had some problems, with new management in 2004 introducing an era of profit warnings. In 2008 new bosses came in and as you can see from the chart the company is now on a steady climb.
The stock exhibits clear trends, and these are in turn fairly well marked by the MACD. The volatility exhibited is reasonable, with many opportunities for spread trades but with no obvious danger signs of sharp rises or falls. As usual, the narrowing of the Bollinger Bands is typically followed by a sharp move up or down.
Rentokil Initial Rolling Daily: How to Spread Bet on Rentokil Initial Shares?
The current rolling daily price for Rentokil Initial is 92.67 sell – 93.13 buy. If you are feeling bullish on this share, then you may choose to place a long or buy bet at the buying price of 93.13. Perhaps you decide to stake £20 per point.
As this is a rolling daily bet, the bet is rolled over each evening by your spread betting provider, who may charge a small amount to your account when this is done. Usually the cost is not great, and on a trading time scale of days or weeks will not amount to much. Suppose after a few days the price goes up to 99.91 – 100.37. You might choose to close your bet and collect your winnings. The opening price was 93.13 and the closing price is 99.91. This means you gained the difference, 6.78 points. Multiplying 6.78 by your stake of £20, your total winnings work out to £135.60.
It frequently happens that a stock will not go in the direction that you wish, and if you do much trading you will realize that you have to accept your losses and move on. Say the price went down to 87.60 – 88.06, and you ended the trade. In this case the opening price is again 93.13, but the closing price is 87.60. 93.13 minus 87.60 is 5.53 points. With a wager of £20 per point, that amounts to a loss of £110.60.
Many spread traders find it convenient to use a stop loss order to help them quit a losing trade. The stop loss order is placed when the bet is opened, and tells your spread betting provider at what price level you want the losing trade to be closed. With a stop loss order, this bet might have been closed at 89.05 – 89.51, and with a closing price of 89.05 you would have lost 4.08 points. This would have contained your loss to £81.60.
Rentokil Initial Quarterly Futures
Some traders prefer to use the futures style bet, particularly if they think they will be in the bet for a few weeks or months. The advantage is that there is no rollover charge made to your account; the disadvantage is that there is usually a larger spread, which in the end is effectively your trading cost.
The current quote for a far quarter bet on Rentokil Initial is 92.80 – 93.92. Putting on a long bet for £15 per point at 93.92, you watch the market go up to 103.66 – 104.78, at which time you decide to collect your profits. Your gain is from a starting price of 93.92 to a closing price of 103.66, and that works out to 9.74 points. Multiplying by your stake of £15, the total you have won is £146.10.
But once again, you may find yourself in a losing position. Say the price goes down to 87.60 – 88.06, and you decide to close the trade and cut your losses. The opening price was 93.92. You close the bet for a loss at 87.60. That means you lost 93.92-87.60 points, which is 6.32 points. For your chosen size of stake, that amounts to £94.77.
With a futures style bet, the spread bet is not due to close for several, maybe many months. However, you may close it quickly if it goes against you, and there is no restriction on how quickly a futures bet can be exited. If you set a stop loss order on this bet, and it suddenly turns against you, the bet will be closed as soon as your chosen price level is reached. Perhaps a stop loss order would close this bet for you when it reached 89.05 – 89.51. Taking the closing price of 89.05 away from the opening price of 93.92, you would find that you have lost 4.87 points. Multiplying by £15, your total loss is £73.05.