Sector bets are designed to allow clients to benefit from strength or weakness in a particular industry.
In comparison to an Index bet, a sector spreadbet is far more focused on a particular segment of industry allowing for greater focus. An advantage of sectors over holding individual stocks is that the sector bet allows for greater diversification of risk.
- UK Aerospace & Defence
- UK Banks
- UK Beverages
- UK Chemicals
- UK Construction & Materials
- UK Electricity
- UK Fixed Line Telecoms
- UK Food
- UK Food & Drug Retailers
- UK Gas, Water & Multi Utilities
- UK General Industries
- UK General Retail
- UK Health Care Equipment & Services
- UK Household Goods & Home Construction
- UK Industrial Engineering
- UK Life Insurance
- UK Media
- UK Mining
- UK Mobile Telecoms
- UK Non Life Insurance
- UK Oil & Gas Production
- UK Personal Goods
- UK Pharmaceuticals & Biotechnology
- UK Real Estate Investment Services
- UK Real Estate Investment Trust
- UK Software & Computer Services
- UK Support Services
- UK Tech Hardware & Equipment
- UK Tobacco
- UK Travel & Leisure
How do you Spread Bet Sectors?
When you trade sectors you take a position on the direction in which you believe an entire industry sectors (say, retail or banking sector) will perform in the future. For instance, if copper prices are reaching new highs and you believe that this will positively impact mining companies, you could go long on the mining sector. Your gains will increase so long as your prediction proves right and the mining sector moves in your predicted direction. Do keep in mind, however, that you will incur a loss if you are wrong and prices move against you.
Spread Betting Sectors: Trading Example
- Analysts at a major financial institution raise their outlook on the UK Media sector. Having read the analysts note, you agree with the recommendation and decide to buy the UK Media sector.
The spread betting company’s Daily Rolling Cash quote is 4249 – 4258, you decide to go long (buy) £2 at 4258. A month later the price is quoted as 4320 – 4329, you therefore decide to sell £2 at 4320, realising a profit of 62 points (4320 – 4258) x £2 (bet size) = £124 profit
- You have noticed that the recent results of companies reporting in the Mining sector have been underperforming market expectation; therefore you decide to go short of the UK Mining sector with a view to benefiting from further weakness in this particular sector.
The spread betting company’s Daily Rolling Cash price is 24300 – 24342. You decide to go short (sell) at 24300 at £1 per point. You also place a stop loss to buy £1 at 24400.
Later that day, a move higher in the sector results in your stop loss being filled at 24400. This results in a loss of 100 points (24400 – 24300) x £1 (bet size) = £100 loss.