Royal Mail Spread Betting Guide

Royal Mail Spread Betting Guide

Royal Mail Spread Betting Guide

arrow_forwardLive Royal Mail Chart
arrow_forwardLive Royal Mail Prices
arrow_forwardWhere to Spread Bet on Royal Mail
arrow_forwardHow to Spread Bet on Royal Mail


Live Royal Mail Chart and Prices




30 August 2017: Royal Mail Sent from FTSE 100

Royal Mail shares were very popular when they IPO’d in 2013.

Since then, like a fading relationship that once promised so much, investors have fallen out of love with the stock.

Royal Mail PLC has now been dropped off into the FTSE 250.

Royal Mail PLC Weekly Chart


Why the Fall From Grace?
  • trending_downLetter volumes have dropped faster than expected
  • trending_flatThe parcel delivery side of the business, where much investor optimism was stored, remains a tough business
It’s tempting to get on the bandwagon and short the stock but I’m staying out of this for now.

Royal Mail is far from dead and I don’t want to get caught on the wrong side of a bear squeeze if they suddenly show improved numbers on the parcel side of the business.


Where Can I Spread Bet on Royal Mail?

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

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How to Spread Bet on Royal Mail

For example, let’s say that you want to take a position on Royal Mail, you go on a spread trading website, such as IG, and they are offering the live quote of:

Royal Mail Rolling Daily: 526.7p – 527.8p

This is what you need to know

The Market Royal Mail Rolling Daily
Spread 526.7p – 527.8p
How the Trade Works You can speculate on the Royal Mail Rolling Daily market to go:

  arrow_upward  Above 527.8p, or
  arrow_downward  Below 526.7p

This market is a Rolling Daily market which means that there is no expiry date for this trade. If you decide not to close your position and the session ends then your trade will automatically roll over to the next trading day.

Note that if a trade is rolled over then you will normally either have to pay or receive interest for overnight financing based on whether you are speculating on the market to go down or up.

For additional information also see Rolling Daily Spread Bets.
Units Traded Financial spread bets on the Royal Mail market are priced in £x per penny.

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

E.g. if Royal Mail moves by 40p then you would lose / win 40 times your stake.
Stake (Trade Size) You work out how much you are going to risk per penny, e.g. £1 per penny, £5 per penny, £20 per penny etc.
Quick Staking Example With that in mind, if you have a stake of £3 per penny and Royal Mail moves 28p, you would gain or lose £3 per penny x 28p = £84.


Trading Example | Going Long of Royal Mail

Financial spread betting on postal firm’s share price to increase

You Now Choose to Buy or Sell Royal Mail to push:

  arrow_upward  Above 527.8p? or
  arrow_downward  Below 526.7p?

You Might Decide to Go Long   arrow_downward  Above 527.8p
You Decide How Much to Risk, Opting for £5 per penny
Now What Happens?
  • You make a profit of £5 for every penny Royal Mail increases above 527.8p
  • You lose £5 for each penny Royal Mail moves below 527.8p
If You Are Buying a Market Your Trading P/L = (Closing Value – Initial Value) x stake per penny
 
Example 1 Royal Mail climbs and the spread trading market is revised and set at 548.9p – 550.0p.
Lock in a Profit? You can decide to leave your position open or close it in order to lock in your profit. In this example you opt to settle your trade and sell the market at 548.9p.
Your Trading P/L = (Closing Value – Initial Value) x stake per penny
(548.9p – 527.8p) x £5 per penny
21.1p x £5 per penny
Your Trading P/L = £105.50 profit
 
Example 2 Royal Mail drops and the spread betting market is revised and moved to 509.3p – 510.4p.
Close and Limit the Loss? At this point, you could opt to leave your bet open or close it, i.e. close your position and restrict your loss. In this case you opt to settle your trade by selling the market at 509.3p.
Your Trading P/L = (Closing Value – Initial Value) x stake per penny
(509.3p – 527.8p) x £5 per penny
-18.5p x £5 per penny
Your Trading P/L = -£92.50 loss


Fully Worked Spread Betting Example | Selling Royal Mail

Spread trading on the equity to decrease in value

You Now Choose to Go Long or Short Royal Mail moving:

  arrow_upward  Above 527.8p? or
  arrow_downward  Below 526.7p?

You Might Choose to Go Short   arrow_downward  Below 526.7p
You Select How Much to Risk, Choosing £3 per penny
So What Happens Next?
  • You lose £3 for each penny Royal Mail goes above 526.7p
  • You make a profit of £3 for each penny Royal Mail moves lower than 526.7p
When Betting on a Market to Go Down Your Trading P/L = (Initial Value – Closing Value) x stake per penny
 
Example 3 Royal Mail goes lower and the financial spread betting market adjusts and moves to 496.1p – 497.2p.
Take Your Profit? At this point, you may choose to let your trade run or close it, i.e. close your position to lock in your profit. In this example you decide to settle your position by buying the market at 497.2p.
Your Trading P/L = (Initial Value – Closing Value) x stake per penny
(526.7p – 497.2p) x £3 per penny
29.5p x £3 per penny
Your Trading P/L = £88.50 profit
 
Example 4 Royal Mail rises and the spread betting market is revised and is set at 551.4p – 552.5p.
Restrict Your Loss?At this point, you may choose to let your position run or close it to limit your loss. For this example, you decide to settle your position and buy the market at 552.5p.
Your Trading P/L = (Initial Value – Closing Value) x stake per penny
(526.7p – 552.5p) x £3 per penny
-25.8p x £3 per penny
Your Trading P/L = -£77.40 loss


Royal Mail Notes:

AuthorAlex Turner

Senior Editor, SpreadBetMagazine

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