Bank of America Spread Betting Guide

Bank of America Spread Betting Guide

Bank of America Spread Betting Guide

arrow_forwardLive Bank of America Chart
arrow_forwardLive Bank of America Prices
arrow_forwardWhere to Spread Bet on Bank of America
arrow_forwardHow to Spread Bet on Bank of America


Live Bank of America Chart and Prices



Where Can I Spread Bet on Bank of America?

Most spread betting brokers will offer markets on the bigger US stocks including Bank of America.

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How to Spread Bet on Bank of America

For example, let’s assume you want to speculate on Bank of America, so you look at a financial spread betting website, like City Index, and see that they are offering the latest spread priced at:

Bank of America Rolling Daily: $6.30 – $6.33

This is what you need to know.

Spread Trading Market: Bank of America Rolling Daily
The Spread Betting Price: $6.30 – $6.33
This Means That: You can take a position on the Bank of America Rolling Daily market moving:

  arrow_upward  Above $6.33, or
  arrow_downward  Below $6.30

This is a ‘Rolling Daily’ trade and so there is no settlement date. If you decide not to close your trade and the session ends then your position will automatically roll over into the next session.

Note: if the trade is rolled over then you will either have to pay or receive interest for overnight financing based upon whether you are speculating on the market to increase or decrease.

For additional info, please read our guide to daily spread betting markets.
Traded Units: Trades on the Bank of America market are priced in £x per cent.

Where a cent is $0.01 of the share’s price movement.

E.g. if Bank of America changes by 45¢ ($0.45) then you would win or lose 45 times your stake.
Stake Size: You decide how much you want to risk per cent, e.g. £2 per cent, £3 per cent, £8 per cent etc.
Staking Example: If, as an example, your stake is £4 per cent and Bank of America moves by $0.29 (29¢), you would win / lose £4 per cent x 29¢ = £116.


Fully Worked Trading Example | Taking a Bullish View of Bank of America

Spread trading on the US bank’s stock to increase

You Decide Whether to Go Long or Short: Bank of America to push:

  arrow_upward  Above $6.33? or
  arrow_downward  Below $6.30?

Let’s Assume You Choose to Buy:   arrow_upward  Above $6.33
You Decide Your Stake Size, Let’s Assume You Select: £5 per cent
So What Now?
  • You win £5 for every cent ($0.01) Bank of America rises above $6.33
  • You lose £5 for each cent ($0.01) Bank of America decreases below $6.33
If You Are Betting on a Market to Increase Your Trading P&L = (Final Value – Initial Value) x stake per cent
 
Trading Scenario 1 Bank of America rises and the spread trading market adjusts and moves to $6.54 – $6.57.
Close for a Profit? You can decide to keep your trade open or close it, i.e. close your spread bet to lock in a profit. For this example, you choose to close your position and sell the market at $6.54.
Your Trading P&L = (Final Value – Initial Value) x stake per cent
($6.54 – $6.33) x £5 per cent
$0.21 x £5 per cent
21¢ x £5 per cent
Your Trading P&L = £105 profit
 
Trading Scenario 2 Bank of America pushes lower and the financial spread betting market is adjusted and moved to $6.09 – $6.12.
Time to Limit Your Loss? You may choose to keep your spread bet open or close it, i.e. close your spread bet to limit your losses. In this case you decide to settle your position by selling at $6.09.
Your Trading P&L = (Final Value – Initial Value) x stake per cent
($6.09 – $6.33) x £5 per cent
-$0.24 x £5 per cent
-24¢ x £5 per cent
Your Trading P&L = -£120 loss


Trading Example | Taking a Short Position on Bank of America

Financial spread trading on the US share to decrease

You Now Decide Whether to Go Long or Short: Bank of America going:

  arrow_upward  Above $6.33? or
  arrow_downward  Below $6.30?

You Might Want to Sell:   arrow_downward  Below $6.30
You Decide Your Stake, Let’s Assume You Opt For: £3 per cent
Now What Happens?
  • You lose £3 for each cent ($0.01) Bank of America goes above $6.30
  • You win £3 for each cent ($0.01) Bank of America decreases lower than $6.30
When Spread Betting on a Market to Go Down Your Trading P&L = (Initial Value – Final Value) x stake per cent
 
Trading Scenario 3 Bank of America falls and the spread betting market is revised to $5.99 – $6.02.
Close and Take a Profit? You may opt to keep your bet open or close it in order to take your profit. In this instance you opt to close your bet by buying the market at $6.02.
Your Trading P&L = (Initial Value – Final Value) x stake per cent
($6.30 – $6.02) x £3 per cent
$0.28 x £3 per cent
28¢ x £3 per cent
Your Trading P&L = £84 profit
 
Trading Scenario 4 Bank of America pushes higher and the market is revised and set at $6.59 – $6.62.
Close and Limit the Loss?At this point, you may choose to leave your bet open or close it and limit your losses. In this instance you choose to close your trade and buy the market at $6.62.
Your Trading P&L = (Initial Value – Final Value) x stake per cent
($6.30 – $6.62) x £3 per cent
-$0.32 x £3 per cent
-32¢ x £3 per cent
Your Trading P&L = -£96 loss


Bank of America Notes:

  • Prices taken from the City Index’s charts as of 9 November 2011
  • Most companies will also allow you to spread bet on the US bank’s stock in euros/cent and US dollars/cent
  • You can also trade US stocks, like BoA, Exxon Mobil, Starbucks etc. with DFBs

AuthorAlex Turner

Senior Editor, SpreadBetMagazine

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