Spread Betting on IBM | Spread Trading

International Business Machines Corporation (IBM) is a large multinational corporation head-quartered in New York, in the United States. Even though it is US based, spread betting on its share price is more commonly conducted in pounds sterling than US dollars. IBM offers computer hardware and software, and associated technologies such as consulting and hosting. Its personal computer, the IBM PC, was introduced in 1981 and soon became a standard which is the basis of many personal computers to the current day. However, IBM sold its personal computer business in 2005, and now concentrates more on software systems and hardware components. For instance, it provides the processors for the Xbox 360, Nintendo GameCube and Wii, and Sony’s PlayStation.

Many may not realize that IBM has been in business since 1911, when it was founded as the Computing Tabulating Recording Company, producing time clocks and tabulating equipment. The International Business Machines name was adopted in 1924. IBM holds the most patents of any US-based technology company, and invented such items as the ATM, floppy disks, hard disks, and even UPC codes which were introduced in 1973, along with a point of sale barcode reader.

Spread Betting IBM Shares

This weekly price chart shows that IBM has been generally in a strong uptrend, and notably has soared to about 50% higher than its highest stock price prior to the 2008 global financial crisis, where many other companies are still struggling to reach their previous highs. It continues to develop its technologies both in-house, with nine research laboratories around the world, and by investing in and acquiring other companies.

Unlike smaller technology companies, where incidental findings and happenings can markedly impact the stock price, IBM remains fairly predictable if volatile in its share pricing. You can see from examining the chart above, that the MACD seems to work particularly well at predicting the forthcoming trends, and you would have made a profit if you had entered your spread bets in accordance with its dictates, provided that you used a suitable exit strategy.

IBM Rolling Daily Spreadbet

The current price quoted by IG Index for a rolling daily spread bet on IBM is 20,627 – 20,638. With a rolling daily buy bet, you can expect your account to be charged a small amount each evening when the bet is rolled over to the next day, but the amount is usually not significant compared to your trading gains (or losses). For the sake of example, assume that you have chosen to place a long bet, buying at 20,638 with a stake of 24 pence per point. As the share price is so high, IG Index allows a lower bet size than the customary £1.

It is likely that the price will move by several hundred points. If it moves in your favour, you may choose to close your bet and collect your winnings at a time when the quote is 21,263 – 21,274. Although your spread betting provider will work out for you how much you have won, it is simple enough to figure it out for yourself. Your bet started at 20,638, and you closed it when the sell price was 21,263. This is a net gain of 625 points. For your stake size you would have won £150.

No one has invented a trading strategy that wins all the time, and you may find that this bet is a loser. Perhaps you will let the price go down to 20,206 – 20,217 before you accept that is not going to perform, and close the spread bet for a loss. 20,638 minus 20,206 is 432 points, for a loss of £103.68.

Another way to close a losing trade is to set a stoploss order when you open the bet. If you had done this, you might find that the trade closed at 20,342 – 20,353. With a point difference of 20,638 less 20,342, or 296 points, your loss this time works out to £71.04.

IBM Futures Spread Bet

Futures based spread bets are generally available for three periods, the near quarter, the mid-quarter, and the far quarter. Depending on the month when you place it, the far quarter one will expire in roughly 7 to 9 months. The current price for the far quarter on IBM is 20,681 – 20,714.

This time, assume that you believe the share price will drop in the next few weeks or months. Your spread bet will be a sell bet or short bet, placed at the selling price of 20,681. Perhaps you would stake £1 per point on this wager. Let’s say that the price falls to 19,826 – 19,854, and you decide to take your profit. Your bet was made at a price of 20,681, and it closed at a price of 19,854. The difference between these is 827 points, which for your stake amounts to £827.

If the market does not go along with your assessment, and the price rises, then you might decide to cut your losses and close the bet when the price is quoted at 21,213 – 21,245. With a starting price of 20,681, and the closing price of 21,245, you have lost 564 points. As you wagered £1 per point, this loss would amount to £564.

Many traders and spread betters make a practice of using a stoploss order on their open trades. This requires the broker to close a losing position when it reaches a level that you decide, and saves you having to keep an eye on the market to minimize your possible losses. Had you taken out a stoploss order on this trade, it is possible that the spread bet would have been closed when the price rose to 21,056 – 21,083. The point difference now is 21,083 minus 20,681, or 402 points. This would be a loss of £402.