Unilever plc is well-known as a leading consumer goods company. Its products include many household names, such as Flora, Hellman’s, Knorr, Lipton’s, Comfort, Omo, Domestos, Surf, Dove, Vaseline, Ponds, Sunsilk, etc. Unilever is actually British-Dutch, and dual listed with Unilever NV in the Netherlands and Unilever PLC in London. It is the third largest consumer goods company in the world based on 2011 revenues, and is also the world’s largest maker of ice cream.
The origins of Unilever go back to the 19th century. Lever Brothers was founded in the 1890s, with its lead product at that time being Sunlight soap. The Dutch Margarine Unie joined forces with Lever Brothers in 1930, ostensibly because both products were made from palm oil which could be imported more cheaply in greater quantities. Thus Unilever was formed.
More recently, much of Unilever’s expansion has been by rationalization and acquisition of other brands. For instance, in 1984 the company bought Brooke Bond/PG Tips, in 1987 Ponds and Vaseline, in 1996 Suave and Degree, and in 2000 the American businesses Best Foods, Ben & Jerry’s, and Slim Fast.
This monthly price chart shows that Unilever continues to grow on a fairly steady path. In common with many other companies, there was some retracement during the global economic crisis of 2008, but the trend is most definitely upwards. Unilever continues to try and act as a good neighbour, committing to sourcing all its tea in a sustainable manner globally by 2015.
From a spread betting point of view, you can see that both the retracement and the subsequent growth were clearly signalled by the MACD, with the current less strong up-trend showing as a neutral signal. The chart shows that the prices are not too volatile and respond to technical analysis, and therefore this should be at most times a reasonable stock on which to spread bet.
Spread Betting Unilever Rolling Daily
With a multiplicity of products, Unilever is well diversified in the consumer goods sector, and is a consistent performer. The current quote for a rolling daily bet is 2011.0 selling price, 2015.0 buying price. If you believe that the price will be going down, you could take out a short bet for, say, £4 per point.
If the market goes down, then you may consider closing the trade and collecting your profits when the quote is 1867.5 – 1871.5. As it is a short bet, it closes at the higher or buying price of 1871.5. The entry price was 2011.0, so you have gained 2011.0 minus 1871.5 points, which is 139.5 points. As you staked £4 per point, you have won £558.
However, the price might have gone up after you placed your short or sell bet, and then you would have to close your bet for a loss, accepting that this one didn’t work out. Perhaps the price goes up to 2127.6 – 2131.6 before you close the trade. Your short bet closed at the buying price of 2131.6, so taking away the opening price of 2011.0 you find that you have lost 120.6 points. Multiplying by £4, that amounts to £482.40 lost.
Many traders use the stop loss order to help them control their losses. It works especially well if you cannot be watching the markets all day long, as it requires your spread betting provider to close a losing trade when it reaches a level that you set, and does not need your intervention. Say in this case a stoploss order would have closed your losing bet at a price of 2093.5 – 2097.5. Your sell bet was opened at 2011.0, and this time it closed at 2097.5.
Unilever Futures
If you are looking at betting for a longer period, such as some weeks or months, you may want to place a bet on the quarterly shares futures. These are usually available for the near quarter, mid-quarter and far quarter. The price for Unilever shares for the far quarter is quoted at 2019.8 – 2031.8. If you think that Unilever shares will go up, you might place a long bet for £2.50 per point.
Your long bet goes on at 2031.8, the buying price. Supposing that the stock price increases, you might look to cash in your bet and collect your profits when the quote goes up to 2237.5 – 2248.2. In this case, your starting price was 2031.8 and the closing price was 2237.5. 2237.5 minus 2031.8 is 205.7 points. Multiplying by your bet size, you find you have won £514.25.
It is also quite possible that the stock price went down after you placed your bet, and that you have a losing trade. As soon as you realize that the bet is not going to work, it is a good idea to close it and minimize your losses. Say it went down to 1852.3 – 1862.7, and you decided to finish the bet. The bet would close at 1852.3, down from a starting price of 2031.8. That means you have lost 179.5 points. Because the bet was for £2.50 per point, your losses amount to £448.75.
It may help to use a stop loss order, as many traders do, as it can keep your losses down. Say you use a stop loss order and this meant that the spread trade closed when the price was 1915.6 – 1927.6. You have lost 2031.8 less 1915.6 points on the bet, which is 116.2 points. Multiplying by your stake, this cost you £290.50.