Spread Bet on Aviva PLC | Spread Trading

Aviva PLC is a multinational insurance company headquartered in London, and listed on the New York Stock Exchange as well as having a primary listing on the London Stock Exchange. It counts itself as the sixth largest insurance company in the world, and has more than 50 million customers in 28 countries. It covers not only general insurance but also pensions and life insurance in the UK.

Aviva may be one of the oldest companies in the FTSE 100, being able to trace its beginnings back to an insurance society in the 17th century. However, the name Aviva was only invented and adopted in 2002. The company was formed out of the British insurance companies Norwich Union, Commercial Union, and General Accident, though these well-known giant insurance companies were themselves covered by about 50 different trading names around the world. It expanded into the United States by acquisition in 2006, and has no relation to the American company called Aviva which deals in energy.

The last few years have been turbulent for some insurance companies, with involvement in underwriting financial losses from the global economic collapse. In the US, AIG was sacrificed, and many financial institutions insured by it were rescued by government intervention. Aviva has had its share of financial setbacks, with a share price of more than 800 a few years ago now trading just above 300, or £3 per share. The last few years have been mixed, and the price has been trading in a range between 300 and 450.

However, the Aviva is still in the top 100 companies listed on the London Stock Exchange, and thus included in the FTSE 100, and since some rationalization including disposing of the RAC breakdown division, looks as though it will be set for steady growth in the future. It is easy for insurance companies to become so large that they become complacent about the risks that they are covering, but the financial warnings over the last few years have alerted many to this possibility, so it is not likely that Aviva will crash again.

Spread Betting Aviva Rolling Daily

The current price for Aviva PLC for a daily rolling spread bet is 304.89 – 305.51. The daily high low range is around 10 points, and the stock is currently in a strong downtrend. Suppose you believe that the downtrend will continue, and want to place a spread bet for £8 per point on it, your bet would go on at the selling price of 304.89.

If you have anticipated the movement of the price correctly, you may find that the quote drops to 280.13 – 280.75, and decide to close your bet and take your winnings as this level corresponds to a previous support which you think will hold. To work out how much you have won, you must take away the closing buying price from the opening selling price, that is take 280.75 from 304.89. This gives you 24.14 points, and multiplying by your stake you can see that you have won £193.12.

Of course, the stock price may also turn around and go up, leaving you with a losing spread bet. In this case you must close your bet and accept your loss before it becomes too great. Say it went up to 326.23 – 326.85 and you closed the spread trade. Calculating how much you have lost, you take 304.89 away from 326.85, with the result that you have lost 21.96 points. This equates to £175.68 for your wager.

As an alternative, you might have placed a stop loss order when you took out your original trade, and this would have watched the price for you and taken you out of the bet when your preset level was reached. Say the stoploss order closed the spread bet for you when the price reached 315.67 – 316.30. This time the amount of points you lost is 316.30 minus 304.89, which is 11.41. The cost of this losing spread bet is £91.28.

Aviva Futures Based Bet

Aviva is a large multinational insurance company based in London, and its current quote for a futures based spread bet three quarters away is 305.86 – 309.55. The futures prices quoted by a spread betting provider are always based on the stock futures price, and do not express the spread betting provider’s view on how much the stock price may change, merely reflecting the market.

If you think that Aviva will be going up in price over the next few months you might place a long or buy bet for £12 per point. This goes on at 309.55, the buying price. Suppose that over the next few weeks you watch as the price climbs steadily, until you are ready to take your profit when the price reaches 349.23 – 352.71. Your bet closes at the selling price of 349.23.

To work out how much you have won, you must calculate the point difference. 349.23 less 309.55 is 39.68 points. As you wagered £12 per point, that means you have won £476.16.

Often times, you will find that the bet will run against you, and you are faced with having to close the trade for a loss. One of the secrets of successful spread betting is that you do not allow your losses to become too large in the hope that they will turn around, but accept them as they happen. Say you closed your bet when the price went to 278.32 – 282.05.

This time the point difference is 309.55-278.32, which is 31.23 points. That means you have lost £374.76. As an alternative to manually closing the spread bet when it is losing, you could have placed a stop loss order at the same time as you opened the bet. This would make your spread betting provider close the spread bet for you if the losses exceeded a certain amount. Perhaps you set your stop loss 20 points away, so the spread betting company closed your bet when the quote reached 284.71 – 288.32. In this case you have lost 309.55 less 284.71, which is 24.84 points. For the stake you wagered, you would have lost £298.08.