Spread betting on the Spanish markets gives you an opportunity to profit from an economy which often goes in a different direction from your own. The Spanish markets are dominated by indigenous companies, and these are affected by local conditions. The current spread betting quote for Telefónica SA is 1291.7 – 1294.3, and you might choose to wager £5 per point at 1291.7 that the price will go down.
If you are correct, and the price drops to 1236.2 – 1238.6, then you could close your bet and take your profit. The profit is simply found by multiplying the number of points that you have gained and your stake, like this: –
- Your short bet opened at 1291.7
- The bet closed at 1238.6
- Therefore the number of points you gained is 1291.7-1238.6
- That works out to 53.1 points
- You staked £5 per point
- Therefore you won 53.1 times £5
- That’s a total of £265.50
No matter how carefully you pick your bet, there will be times when the price goes in the opposite direction to that you expect. If for instance, the price of Telefónica SA went up to 1306.5 – 1309.1, you might decide to close your bet for a loss before it became any greater. In this case the amount you lost is figured out like this: –
- Your short bet opened at 1291.7
- The bet closed at 1309.1
- So the number of points you lost is 1309.1-1291.7
- That’s 17.4 points
- Multiplying this by your stake, you will find you have lost £87.
There are several banks listed in the Spanish markets, and looking at Banco Santander Central Hispano SA, to give it its full name, you see that the daily rolling bet is quoted at 512.5 – 513.5. In this case you are feeling bullish, and place a buy bet at 513.5 for £12 per point. If the price was to go up to 550.3 – 551.3, which is quite a large rise, then you could close your bet and take your profit. The bet would close at 550.3.
- Your long bet opened at 513.5
- The bet closed at 550.3
- The number of points you have gained is 550.3-513.5
- That’s a total of 36.8 points
- For a stake of £12 per point, you have gained 36.8 times £12
- Your total winnings are £441.60
On the other hand, the price might have gone down after you placed your bet, and you could be faced with cutting your losses quickly before it drops too far. Say it goes down to 497.6 – 498.6 before you close your bet.
- Your long bet opened at 513.5
- The bet closed at 497.6
- The number of points you lost is 513.5-497.6
- This works out to 15.9 points
- Your stake was £12 per point
- The amount you lost was 15.9 times £12
- So your total loss is £190.80
One of the secrets to being successful at spread betting, and at financial trading in general, is to make sure that you minimize your losses by closing the position quickly.
Other Notable Mentions
TELEFONICA: Spanish telecommunications company Telefonica is listed on the Spanish Stock Market and has more than 1.5 million direct shareholders.
How to Spread Bet Spanish Shares
The Spanish markets are not isolated from the general European economic downturn, and a whole set of austerity measures are being tried to balance the budget. Such activity in the financial world means that the stock market will either soar, in appreciation of what it sees as realistic and workable programs, or slump if it is thought that the government is not getting to grips with the economy. In either case, this is good news for anyone looking to spread bet Spanish shares, as profit in betting comes from price changes whether up or down.
The main stock market in Spain is in Madrid (Bolsa de Madrid), and there are several other regional markets but they are linked electronically to stay in line. In practice, when spread betting shares from Spain you will not be aware of the differences. The market index, called the IBEX, is made up of the 35 largest companies, and these are not seen much outside the country – certainly, Spain does not provide an alternative stock exchange for large multinationals. The largest company on the index is the telecommunications company, Telefónica, and perhaps surprisingly in the light of the economy the second largest is a bank, Banco Santander.
As Spain is a popular holiday destination, you may recognize some of the other companies but they are not in general worldwide markets. This means that you will probably need to do some research to find out about them before even considering betting on the Spanish stock prices. Fortunately, the Internet provides a resource which makes research relatively uncomplicated, and can even help with any translation requirements.
But the most important part of research right now is into the health of the economy, as “a rising tide lifts all boats”, and the converse is also true. General economic conditions are overwhelming individual company performance.
If you want to spread bet Spanish shares, it would be wise to form a judgment on the direction that the economy is heading before drilling down to the individual companies. It is generally considered better to trade “with the trend”, so if the economy is declining you should be looking principally for shorting or selling opportunities.
You will find that the spread offered by most spread betting companies is a direct reflection of the liquidity of trading of the underlying company. This means that you should try to stick to the larger companies, perhaps considering at the start just the ones involved in the IBEX index, so that you are not handicapped by a large spread when you place your bet. The better spread betting providers allow you to pull up charts of previous price performance, and it is a good idea to print them out if you’re interested in a particular stock. That way, you can doodle in pencil on the chart, trying to identify support and resistance levels and inserting trend and channel lines.
Whenever you are spread betting, you should take care to preserve your capital, and set realistic stop loss levels that allow room for volatility to be expressed, but still protect your principal.