Spectris manufactures precision instruments and controls. As you can see from the weekly price chart below, it has exhibited severe volatility in recent times, making it an interesting prospect for spread betting.
In fact, the daily price chart shows even more volatility including some price gaps between trading periods, so this is not a stock for those who are learning to spread trade and would have hesitation in reacting as needed.
The company was originally founded as Fairey Aviation Company in 1915, and its initial business was manufacturing seaplanes. However, in 1980 it was bought by Pearson, which is now the largest education and book publishing company in the world including such titles as The Financial Times and Penguin. There was a subsequent management buyout in 1987, prior to being listed on the London Stock Exchange in 1988. It wasn’t until the 1990s that the company focused on electronics and hydraulics.
After several acquisitions, it changed its name in 2001 to Spectris plc. It now has four divisions. The first is concerned with materials analysis, including particle measuring systems and similar items. The second is exemplified by its subsidiary, Brüel and Kjær, a Danish firm founded in 1915 which specializes in sound and vibration. The third division covers in-line instrumentation, while the fourth is based around industrial controls.
Because of its specialties, it is sensitive to the overall state of various other market sectors which use its products. This results in a fluctuating market for its goods, even though the company has averaged good single-digit growth overall every year for many years. From a trading perspective, such volatility which results in clear up and downtrends is more useful than a company which simply shows steady growth over time. However, as mentioned above, it is better left to the more experienced trader who knows how to deal with such large price movements.
Spectris Rolling Daily: How to Spread Bet on Spectris Shares?
The price of Spectris needs careful analysis to try and determine which way it is headed. Perhaps your study would suggest that you should place a long bet in anticipation of an increasing price. The current spread betting quotation for a rolling bet is 1769 – 1777. You decide to stake £1.50 per point at the buying price of 1777.
Suppose that the price rises to 1932 – 1940 and you decide to close your trade and collect your winnings. Your spread bet would close at the selling price of 1932. Taking away the starting price of 1777, you find that you have gained 155 points on your wager. For your chosen size of stake, that amounts to £232.50 profit.
If you have studied the financial markets, you will know that they are not always predictable, and there is a good chance that your spread bet will turn out to be a loser. Without exception, all good traders know when to close a losing trade and accept their losses, rather than hanging on in hope and losing more. Suppose the price falls to 1676 – 1684, and you cut your losses. The closing price this time would be 1676. The initial price was 1777. 1777 minus 1676 is 101 points, so the bet amounts to a loss of £151.50.
As most people don’t have time to watch the markets all day long, the stop loss order is very popular amongst spread betters to curtail losses. The stop loss order requires your spread betting provider to close your position once a certain level of loss is reached, and without your further intervention. Suppose a stop loss order on this spread bet would have closed the trade when the price fell to 1691 – 1699. The closing price is 1691. The difference between this and the starting price of 1777 is 86 points, so your loss would be £129.
Spectris Futures
The futures style spread bet is particularly useful if you believe the price will move in the next few weeks or months, and don’t want to pay a daily charge for rolling over the bet. In return, you must accept a larger spread in the quotation, which for Spectris is 1777 – 1789 for the far quarter. By way of example, assume that you place a long bet, buying at 1789 for a stake of £2.50 per point.
It is important to understand that even with a futures style bet, you can close the bet at any time. You might need to do this if the losses were threatening to become too great, or if you felt that you had reached a winning position that was as good as it could get. In this case, perhaps you would close the bet for a win when the price went up to 1913 – 1924. The bet was opened at 1789, and closed at 1913. This means that you made 124 points. Multiplying by £2.50, your total gain is £310.
On the other hand, you may choose to cut your losses if the price drops down to 1686 – 1698. With the same starting price of 1789 and a closing price of 1686, you would have lost 103 points. For your chosen stake, this would be £257.50.
An alternative to close out a losing bet, particularly useful if you cannot be watching the markets all the time, is to use a stop loss order. This will reliably close your position and stop any further loss, even though the actual closing price is not guaranteed unless you pay extra in the form of an increased spread. In this case, a stop loss order might have closed your bet when the price fell to 1701 – 1713. 1789 minus 1701 is 88 points, so multiplying by £2.50 your losses work out to £220.