BHP Billiton Spread Betting Guide

BHP Billiton Spread Betting Guide

BHP Billiton Spread Betting Guide

arrow_forwardLive BHP Billiton Chart
arrow_forwardLive BHP Billiton Prices
arrow_forwardWhere to Spread Bet on BHP Billiton
arrow_forwardHow to Spread Bet on BHP Billiton


Live BHP Billiton Chart and Prices



Where Can I Spread Bet on BHP Billiton?

Most of the spread betting brokers will offer prices and charts on shares including BHP Billiton e.g.:

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How to Spread Bet on BHP Billiton

As an example, let’s imagine that you are thinking of spread trading on BHP Billiton, so you go on a financial spread betting website, such as LCG, and they are offering the latest quote at:

BHP Billiton Rolling Daily: 1989.9p – 1993.4p

This is what you can expect from a trade

The Market: BHP Billiton Rolling Daily
Spread: 1989.9p – 1993.4p
What This Means: Now you can speculate on the BHP Billiton Rolling Daily market to go:

  arrow_upward  Higher than 1993.4p, or
  arrow_downward  Lower than 1989.9p

This is a Rolling Daily spread betting market which means that there is no final closing date for this trade. If you don’t close your position and the session ends then your trade will roll over into the next trading day.

If a trade does roll over then you will normally either receive or be charged interest for overnight financing based upon whether you are speculating on the market to fall or rise.

For additional information also see how a rolling spread bet works.
Traded Units: Trades on the BHP Billiton market are priced in £x per penny.

Where a penny is 1p of the share’s price movement.

E.g. if BHP Billiton moves 55p then you would win or lose 55 times your stake.
Stake: You choose what to risk per penny, e.g. £2 per penny, £3 per penny, £20 per penny etc.
Brief Example: For example, if your stake is £5 per penny and BHP Billiton moves by 24p, you would win/lose £5 per penny x 24p = £120.


Worked Trading Example | Going Long of BHP Billiton

Spread betting on the UK share to increase

You Work Out Whether to Go Long or Short: BHP Billiton to move:

  arrow_upward  Higher than 1993.4p? or
  arrow_downward  Lower than 1989.9p?

Let’s Assume You Choose to Buy:   arrow_upward  Higher than 1993.4p
You Decide Your Stake Size, Let’s Assume You Select: £1 per penny
So What Happens Now?
  • You will make a gain of £1 for each penny BHP Billiton goes higher than 1993.4p
  • Your trade loses £1 for every penny BHP Billiton moves lower than 1993.4p
When Buying a Spread Bet Your P/L = (Closing Value – Initial Value) x stake per penny
 
Example 1 BHP Billiton goes higher and the spread trading market is adjusted to 2068.2p – 2071.7p.
Time to Lock in a Profit? At this point, you could choose to let your trade run or close it in order to take your profit. In this instance you choose to close your trade and sell the market at 2068.2p.
Your P/L = (Closing Value – Initial Value) x stake per penny
(2068.2p – 1993.4p) x £1 per penny
74.8p x £1 per penny
Your P/L = £74.80 profit
 
Example 2 BHP Billiton slips and the spread betting market adjusts and moves to 1903.7p – 1907.2p.
Close and Restrict the Loss? You could choose to keep your trade open or close it, i.e. close your spread bet and limit your loss. In this example you opt to close your position by selling at 1903.7p.
Your P/L = (Closing Value – Initial Value) x stake per penny
(1903.7p – 1993.4p) x £1 per penny
-89.7p x £1 per penny
Your P/L = -£89.70 loss


Fully Worked Spread Trading Example | Taking a Short Position on BHP Billiton

Spread betting on the multinational mining firm’s shares to fall

You Decide Whether to Buy or Sell: BHP Billiton moving:

  arrow_upward  Higher than 1993.4p? or
  arrow_downward  Lower than 1989.9p?

You Might Choose to Go Short:   arrow_downward  Lower than 1989.9p
You Decide Your Stake, Let’s Say You Choose: £2 per penny
What Now?
  • Your trade loses £2 for every penny BHP Billiton increases above 1989.9p
  • You will make a gain of £2 for every penny BHP Billiton pushes below 1989.9p
When Spread Betting on a Market to Fall Your P/L = (Initial Value – Closing Value) x stake per penny
 
Example 3 BHP Billiton decreases and the market is revised to 1937.9p – 1941.4p.
Lock in a Profit? At this point, you could choose to let your position run or close it in order to take a profit. In this instance you decide to close your bet and buy the market at 1941.4p.
Your P/L = (Initial Value – Closing Value) x stake per penny
(1989.9p – 1941.4p) x £2 per penny
48.5p x £2 per penny
Your P/L = £97.00 profit
 
Example 4 BHP Billiton increases and the financial spread betting market moves to 2044.6p – 2048.1p.
Close and Limit the Loss?At this point, you can decide to let your bet run or close it, i.e. close your trade to restrict your losses. In this case you decide to close your trade by buying at 2048.1p.
Your P/L = (Initial Value – Closing Value) x stake per penny
(1989.9p – 2048.1p) x £2 per penny
-58.2p x £2 per penny
Your P/L = -£116.40 loss


BHP Billiton Notes:

  • Financial spread trading quote from LCG, 7 December 2011
  • You could also spread bet on the multinational mining, metals and petroleum giant in euros per penny and US dollars per penny

AuthorAlex Turner

Senior Editor, SpreadBetMagazine

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