Spread Bet on International Consolidated Airlines Group | Spread Trading

The full name of the company may be International Consolidated Airlines Group, but it is known usually as International Airlines Group or IAG. It is one of the youngest companies listed on the London Stock Exchange, even though the constituent companies have been around for much longer. It is headquartered in London, and has a registered office in Madrid, Spain. It was formed in January 2011 by the merger of British Airways and Iberia, the national airlines of the UK and Spain.

In terms of size, it is now the third-largest airline based in Europe, and the seventh largest in the world. The deal between British Airways and Iberia was first announced in 2009, and after regulatory approvals it was confirmed on 21 January 2011, with shares being available from 24 January, the Monday when the markets reopened. It is also listed on the Spanish stock exchanges, and is in the Ibex index as well as the FTSE 100.

IAG has been busy since its formation. In March 2011 it signed a deal for more Airbus aircraft for Iberia’s long-haul routes, and later in the year announced the addition of Iberia Express, a low-cost airline to supplement Iberia’s traditional network. In November 2011 IAG made moves to acquire British Midland International Airlines from Lufthansa, and in May 2012 turned around and sold it on to a business consortium called Sector Aviation Holdings Limited, subject to regulatory approval.

The price chart is necessarily short. Here is the weekly version -:

Spread Betting Consolidated Airlines

This is the sort of chart that would excite an experienced spread better, as it shows a great deal of fluctuation while the market tries to learn the true value of IAG. This also means that it is a trap for the beginner, who should be very careful to protect his capital against this volatility. These are the two sides of trading – you need volatility to get good profits, but it is a double-edged sword of which you must be careful.

Spread Betting International Consolidated Airlines Group Rolling Daily

IAG, as it is commonly known, is a recent amalgamation of British Airways and Iberia, and has shown good volatility as the market assimilates the new fundamentals. The current price for a rolling daily bet is 165.03 – 165.57. It is important to note how low the share value is, as you may wish to place a higher per point stake than you normally do on your spread bet. If you think that the share value is going to increase, then you might want to place a long bet, buying at a price of £15 per point.

Let’s suppose that the price goes up, and that you decide to close your bet and collect your winnings when the price is quoted at 196.21 – 196.75. Your spread betting dealer will tell you how much you have won, but if you want to check his math all you have to do is work out the difference in points and multiply by your stake. As a long bet, your bet opened at 165.57 and closed at the selling price of 196.21. That means you have gained 30.64 points. Although your account may have been charged a small amount each night for keeping the rolling bet open, your profit will be very close to 30.64 times £15, which is £459.60.

Sometimes the bet will not go your way, so suppose that the price drops to 141.58 – 142.12. You can close your bet to cut your losses, so with an opening price of 165.57 and a closing price of 141.58, you have lost 23.99 points, which costs you £359.85.

If you’re not sure that you can keep an eye on the market prices all the time, you might consider placing a stoploss order to ensure that your bet is closed if it is losing. Perhaps a stoploss order would have taken you out of the losing bet when the price was quoted at 153.24 – 153.78. In this case, your starting price is still the same 165.57, but your bet was closed at 153.24. This means you have lost 12.33 points, and the stoploss order kept your loss down to £184.95.

International Consolidated Airlines Group Futures Style Bet

Taking a mid-term view on a new company such as this can be risky, but if you want to do this you could place a futures based spread bet. The current price for the near quarter futures is 164.98 – 165.84. This expires in about a month. If you expect the price to go down in that time, then you would place a short or sell bet at the price of 164.98, staking perhaps £12 per point.

If your spread bet proves to be correct, and the price drops, you might find that you can close the bet and collect your profit when the quoted price is 142.63 – 143.49. That means that you have gained 164.98 minus 143.49 points, which is 21.49 points, which works out to a profit of £257.88. It is important to note that you do not have to wait for the futures style bet to reach the expiration date before cashing in. You can close the bet any time you want, even the day after you take it out, if the price has moved to a level where you want to.

Of course, this can also mean closing the bet quickly if the bet is losing. Perhaps the price goes up instead of down, and you are facing a spread betting quotation of 180.62 – 181.46. Closing the bet now to minimize your losses, you have lost 181.46-164.98 points, or 16.48 points. That amounts to £197.76 loss.

Many spread traders use the stop loss order to make sure that a losing spread bet is closed quickly, even if they are not watching the markets. Perhaps in this case a stoploss order would have taken you out of the losing bet when the price was 174.92 – 175.74. Your loss would be 175.74 minus 164.98 points, or 10.76 points. Multiplying by your chosen stake of £12 per point, you would have lost £129.12.