Trade Chevron

As a multinational US company in the energy sector, Chevron Corporation provides many opportunities for spread betting. It is head-quartered in California, with operations in nearly 200 countries. It is involved in many different aspects of energy supply, including alternative energy, in addition to the staples of oil exploration, production, refining, and distribution. Chevron is counted as one of the big six oil companies in the world.

Chevron started as the Pacific Coast Oil Company in California in 1879. It was acquired by Standard Oil in 1900, but split up in 1911 when a government antitrust lawsuit required Standard Oil to separate into different corporations. The name Chevron started being used in 1930, but it was only in 1984 on its merger with Gulf Oil that it officially adopted the name.

Spread Betting Chevron Shares

This is a monthly price chart, showing clearly the global economic downturn of 2008 and also how Chevron has reached new heights recently, far above its 2008 high of 10,463.

Some of Chevron’s venture into alternative energy has resulted from acquisitions. For instance, Unocal was acquired in 2005, and with it came an extensive geothermal operation in Southeast Asia, which made Chevron the world’s largest producer of geothermal energy. A division of Chevron, Chevron Technology Ventures, did some earlier work on electric vehicles and is now heavily into bio fuel production.

A recent impact to the production, and potentially to dividends and therefore share prices is the fire at its refinery operation in California in August 2012. This is still being investigated, and it is likely that it will reduce the output from the refinery. However, initial findings are that Chevron may not have done anything wrong, and has a better safety record than several other oil companies.

From a spread betting perspective, the chart is showing a strong uptrend which may be affected by the news as noted above. Therefore you need to keep a close eye on the daily or hourly charts, and determine by technical analysis how the market sentiment is evolving.

Chevron Rolling Daily Spread Betting

Chevron shares are in a general uptrend, and you need to examine the short term charts to see if it is continuing or about to pull back and consolidate. The current price for a daily rolling spread bet on Chevron is 11,709 – 11,718. If you are convinced from your analysis that the shares will go up in value, you might consider placing a rolling daily bet for £2.50 per point, buying at a price of 11,718.

As an example, suppose that the price goes up to 12,006 – 12,015, and you decide to close the bet and collect your winnings. To work out how much you have won, you note that your opening price is 11,718, and the bet was closed at 12,006. That means that your bet gained 288 points. As your stake was £2.50 per point, you have won £720. Because this is a rolling daily bet, your account may have been charged a small amount each evening when the bet was rolled over, but this depends on your spread betting provider, and is probably not a significant amount.

It may be that your long spread bet turns out to be bad, and that the shares fall in price after you place it. In this case, you could close the spread bet and accept your losses when the price goes down to 11,487 – 11,496. With a starting price of 11,718, and a finishing price this time of 11,487, you would have lost 231 points. Multiplying by your stake, this amounts to a loss of £577.50.

It is a common practice in trading to use a stop loss order, which takes care of closing a losing trade, even if you’re not online and watching the market. With a stoploss order on this trade, you might have found the bet closing at a price of 11,546 – 11,555. Using a stoploss order will often reduce your losses. In this case you lost 11,718 minus 11,546 points, which is 172 points. For your chosen size of stake, that amounts to £430.

Chevron Futures Spread Betting

Placing a medium term bet at the current price of 11,742 – 11,771, you take a bearish stance, staking £2.25 per point on a short position expecting the price to drop. In a few months, the price has fallen to 11,157 – 11,179, giving you a win. Cashing in your bet at this time, you work out that you have gained 11,742 less 11,179 points, which is 563 points. For the size of stake you placed, you have won a total of £1266.75.

That example assumes that things work out for you. Unfortunately sometimes your bets will lose, and you must expect and accept that the market will not always perform as you predict. It’s possible that in this case the price went up to 12,063 – 12,087, and you decided that you had to prevent further loss by closing your bet. The starting price for your bet was 11,742, and you closed it at 12,087. That means you lost 345 points. Multiplying it by £2.25, your losses amount to £776.25.

Many traders decide to use a stop loss order as some sort of safeguard against disaster. The stoploss order instructs your spread betting provider to close your bet once it reaches a certain level that you set. It is important to note that this does not guarantee how much loss you may bear. All it does is initiate a market order to close the bet, so while the closing price may be close to the one you specify, it may not be the same. If you want a guaranteed closing price, then you need to use a guaranteed stop loss (GSL) for which your spread betting company will quote you a larger spread.

In this case an ordinary stop loss order may have closed your losing bet at the price of 11,956 – 11,982. Your opening price was 11,742, and your spread bet ended at 11,982, for a loss of 240 points. For your chosen size of stake, you have lost £540.