Spread Betting on Barclays PLC

It is hard to know where to start when describing Barclays PLC. The global crises of recent years have especially affected financial institutions, and Barclays has been involved in the middle of it. It seems to be on a steady course now, but has in recent history seen share prices at well over 700 (£7 per share) in 2007, and below 100 in 2009.

Barclays is based in London, and is a multinational banking and financial services company. It operates in over 50 countries and has nearly 50,000,000 customers. It keeps retail and business banking separate from its investment banking, as is considered good practice.

The retail business includes Barclaycard, UK, Europe, and Africa; the investment banking includes corporate banking, investment banking, and wealth management.

Astonishingly, Barclays can trace its history back to 1690, and the name Barclays was first used in 1736. Over the years there have been many mergers and amalgamations to arrive at the present day. In 1966, Barclays issued the first credit card available in the UK, the Barclaycard, and in 1967 it unveiled the first ATM machine in the world, which was in London.

Moving to more recent business, Barclays was involved with Lehman Brothers after it had filed for bankruptcy. The US courts allowed Barclays to acquire the core business, including the Manhattan office. As the global economic crisis unfolded, Barclays was offered billions of pounds sterling by the UK government, but instead chose to raise £6.5 billion from investors. However, through its involvement with AIG, Barclays had already received $8.5 billion from the bailout by the US government.

Without doubt, the financial world in past years has been a turbulent one, but Barclays seems to have come through it without paying the ultimate price. Although financial institutions have had many issues over recent years, Barclays PLC seems set for continuing growth and operation.

Spread Betting Barclays Rolling Daily

The rolling daily spread betting quote for Barclays PLC is currently 214.69 – 215.11. You might decide to place a long bet, if you believe that the price will increase, and choose to stake £15 per point. As it is a long spreadbet, it goes on at the buy price of 215.11. With a rolling daily bet, you may be charged a small amount each evening when the bet is rolled over, but provided you do not intend to hold the bet open for a period of months, these charges should not be large.

A SpreadBet on Barclays Shares

A SpreadBet on Barclays Shares

Assume you are correct, and the price of Barclays increases to 239.56 – 239.98. If you close your bet and take your winnings, you can work out how much by multiplying together the points gained and your stake size. You gained from 215.11 to 239.56, a total of 24.45 points, so with your chosen stake you have won £366.75 on this bet.

Whenever you place a spread bet, you do so in the certain knowledge that some bets will not succeed. The markets are too fickle for anyone to be sure which way they are going, you can only stack the odds in your favour. Let’s say that the price dropped after you placed your spread bet, and you decided to accept your losses when the quote went down to 198.32 – 198.65. Working out the amount again, you lost 215.11-198.32 points, which is 16.79 points, and that amounts to £251.85.

It is a good idea to use a stop loss order when you place a spread bet. This makes sure that you do not hang on to a losing bet, hoping that the price turns around, as it will automatically close the bet for you after a certain amount of loss. Say your stop loss order on this bet closed the trade for you when the price reached 205.63 – 206.05. In this case you would have lost 215.11-205.63 points, or 9.48 points. Your financial loss would be £142.20.

Barclays Futures

When you want to take a longer-term view on a share price using spread betting, you may want to place a bet on a futures based quote, which is usually available for the three next quarters. Barclays PLC is currently quoted at 214.94 – 215.80 for the nearest quarter.

Suppose you believe that the price of Barclays shares is going to go down in the next few weeks, you may choose to place a sell or short bet on this security at a price of £9 per point. A short bet goes on at the selling price, which is 214.94. If you are successful, you may close this spread trade for a win when the price drops to 193.26 – 194.00. You have gained the number of points from 214.94 to 194.00, which is 20.94 points. For your given stake, you won £188.46.

If you are not so lucky, the price might have gone against you and you would be faced with having to close your bet to minimize your losses. Say the price went up to 230.63 – 231.35, and you chose to close your trade. With a short bet, the closing price is the buying price which in this case is 231.35. Therefore you lost 231.35 less 214.94 points, which is 16.41 points. This losing bet would have cost you £147.69.

Some spread traders will not open a bet without also placing a stoploss order. This order tells your spread betting broker to close your bet as soon as your losses reach a certain level, and it saves you having to watch the market all the time. Say you placed a stop loss order on this bet and it closed out your trade when the price was 223.62 – 224.46. Your loss would be less. You lost 224.46-214.94, which is 9.52 points. This keeps your financial loss down to £85.68.