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Spread Betting Alternative to Trading IAG Shares Through Sectors

Dépèche transmise le 2 mars 2012 par PRNewswire

LONDON, March 2, 2012 /PRNewswire/ --

Spread betting [http://www.cityindex.co.uk/spread-betting ] on an individual company such as the International Consolidated Airlines Group (IAG) proved a profitable choice for traders who went long on the firm's share prices prior to them posting their full-year results on Wednesday 29th February.

Announcing a fourth quarter operating profit of GBP28.7 million (before exceptional items) for 2011, IAG showed great improvement on 2010's results for the same quarter of GBP5.06 million.

IAG, of which owns British Airways, enjoyed a boost to their share prices as the market opened on the morning of publishing its results; rising from 164p to 169p within the first four hours of trading. Traders who would have profited from this rise would be those who had gone long on the market and decided to sell as the market rose.

However, by the morning of March 1st 2012, share prices had dropped to around the 162p mark meaning potential losses for traders going long above this price, and gains for others going short from the previous day's highs.

Spread Betting Sectors

An alternative option for traders is to spread bet on a stock sector.

Spread betting sectors [http://www.cityindex.co.uk/range-of-markets/sectors-spread-betting.aspx ] allows traders to take a broader position on the direction of an entire sector such as oil, banks and miners or in this example, travel and leisure.

They can do this without having to take a position on the performance of an individual company within the sector, such as IAG.

The example below will take into consideration the events of Wednesday 29th February and show you how going long on a travel and leisure spread can result in both profits and losses depending on what way the market goes.

For the sake of this example, our Travel and Leisure Jun 12 Spread is trading at 4522/4542.

Travel & Leisure Sector: Going Long

Let's say that on Monday 27th February, you utilised your preferred form of technical analysis and online trading tools [http://www.cityindex.co.uk/learn-to-trade ] and decided to go long on your Travel and Leisure spread.

Predicting that the market would soon rise, you bought GBP5 per point at 4542 (your buy price).

In order to open the position you need to put down a margin of 10% of the notional value of the trade, which is 4542 x GBP5 per point x 10% = GBP2271.00

On Wednesday 29th February, a travel firm announces positive full-year results leading to a rise in the Travel and Leisure Sector shares price.

As the financial market [http://www.cityindex.co.uk/range-of-markets ] opens on the morning of the 29th, the Travel and Leisure spread betting price is trading at 4562/4582.

You decide to close your position by selling GBP5 per point at 4562 (our sell price).

Result: This is a winning trade, resulting in you selling the trade 20 points higher giving you a GBP100 profit, i.e. (4562-4542) x GBP5 = GBP100.

Alternative scenario: Had the price fallen to 4522 - 20 points less - you'd have lost GBP100, i.e. (4542-4522) x GBP5 = GBP100.

Summary

Spread betting [http://www.cityindex.co.uk/spread-betting/start-spread-betting.aspx ] on the Travel and Leisure sector can help traders take a broader position on the direction of a broader range of markets without having to base their potential gains and losses on that of an individual company.

Remember, spread betting is a leveraged product meaning you could incur losses greater than your initial deposit. Ensure you fully understand the risks.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting [http://www.cityindex.co.uk/spread-betting ].

We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk for details.

CONTACT: Contact: Joshua Raymond, City Index, +44(0)20-7107-7002,

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