Apple – the company that does not need an introduction. Anyone with contact with technology is probably aware of Apple Inc. (formerly Apple Computer Inc.), one of the greatest technology successes which we have watched grow from the Apple and Macintosh computers, through to iPod, iPad, and the iPhone. Despite the recent death of the founder, Steve Jobs, Apple still goes from strength to strength, in many senses dictating the market rather than simply responding to demand.
The monthly price chart above shows the meteoric success which Apple continues to enjoy, and it has certainly proved a good stock for early investors, despite the dip during the global economic recession in 2008. It is however worth noting that the price is on a linear scale rather than a logarithmic one, which means that the 20% increase from 50,000 to 60,000 for example is shown as the same distance as the 100% increase from 10,000 to 20,000, making it look as if the rate of expansion is accelerating. Even so, it is the largest technology company in the world, earning more than Google and Microsoft combined.
Apple was established in 1976 and incorporated in 1977, and kept the word “Computer” in its name until 2007, when it became obvious that it was diversified in many different roles of consumer electronics. Though the company is rated as the most admired by Fortune magazine, there have been issues with the conditions in overseas factories where most of the products are manufactured. The company appears to be addressing these concerns.
From a spread betting perspective, this is a technology company and therefore subject to volatility in its price, particularly influenced by events such as new iPhone launches – the latest of which, iPhone 5, was predicted to sell 10 million units in the first week. Any real or imagined defects or faults would similarly have a dramatic impact.
Apple Rolling Daily Spreadbet
Many pundits are calling for Apple shares to fall in value in coming weeks, retracing part of the overriding uptrend. If your technical analysis is in agreement with this, you might want to short or sell Apple (AAPL) as a spread bet. The current price is 69,100 – 69,119 as a rolling daily bet. In view of the high price, IG Index allows betting down to 24 pence per point, as you will see hundreds if not thousands of points moved per day. Say you chose to stake £0.48 per point.
After a couple of days of movement, you may be tempted to close your bet and collect your winnings when the price is quoted at 67,956 – 67,975. Although your spread betting provider will tell you how much you have won, you may want to work it out in advance. Your short bet was placed at 69,100, and you closed it at 67,975, for a gain of 1125 points. As you staked 48 pence per point, this means you have won £540.
But not all spread bets succeed, in fact many of them fail, and one of the secrets of making a profit is keeping your inevitable losses low. If the price went up to 69,952 – 69,973, you might decide to cut your losses and close your bet. The starting price was 69,100, as before, but in this case the bet closed at 69,973. 69,973 minus 69,100 is 873 points. Multiplying this out, you have lost £419.04.
As an alternative, many traders and spread betters use a stop loss order to close a trade if it becomes a loser. This saves you watching the market all the time, as your spread betting provider will close the bet for you. In this case, a stop loss order might have taken you out of the bet when the quote was 69,793 – 69,812. The loss would be 69,812 less 69,100, or 712 points. At 48 pence per point, this would amount to £341.76.
Apple Futures Based Bet
If you want to take a medium-term bet on the price of Apple Inc., you could look to a futures based bet. These are available, typically, for three expiration dates, the near, mid, and far quarters. The current quote for the mid-quarter spread bet is 69,327 – 69,370. If you believe the price is going up, you could place a long or buy bet at 69,370, staking perhaps £1 per point.
The mid-quarter spread bet expires in up to six months time, but this does not prevent you closing the bet to take your winnings or to cut your losses at any time. If your bet works out, you might find that the price went up to 71,231 – 71,270 in a few weeks, and you may find cause to close it and take your winnings if you think that the trend is ending. Working out what you have gained, your spread trade started at 69,370 and you closed it at 71,231. The difference between these is 1861 points, so your bet works out to a gain of £1861.
Should the price go in the wrong direction, you will be faced with having to close your bet and accept your loss. Perhaps you decide to do this if the price drops to 68,123 – 68,162. You can work out how much you have lost in the same way. Your opening price was 69,370, and the bet closed at 68,123 for a loss of 1247 points. This means you have unfortunately lost £1247.
Many spread betters use the stop loss order, placed with the original bet, and designed to automatically close and limit your bet if it is a loser. If you had used this, you might find that the bet closed earlier, when the price dropped to 68,459 – 68,496. Your loss in this case is from 69,370 down to 68,459, which works out to 911 points. For your chosen size of stake, this would cost you £911.