Dell is probably best known for its personal computers and laptops, though it has several different divisions. Its performance over the last few years has been lacklustre, partly because it is in a very competitive market, but given the volatility of the technology market it provides plenty of spread betting opportunities. It was founded in 1984 in Texas, and named after its founder, Michael Dell.
This monthly price chart shows how Dell is continuing to struggle. The company currently employs more than a hundred thousand people. It has recently been trying to expand outside its main business of selling PCs, and diversifying by acquisition.
One of Dell’s selling points is that each PC can be individually configured when it is ordered. It has drifted between direct supply to consumers, and supplying computers directly to large stores such as Walmart for sale. Recent declining sales reflect a perception of serious problems, such as poor customer service and suspect product quality, as well as consumers turning to tablets and smartphones. Despite the unexciting stock price, Dell is still reckoned to be the third-largest PC vendor in the world, after only Hewlett-Packard and Lenovo.
Dell is a truly international company, headquartered in Texas, but with manufacturing facilities in many countries. For instance, it has been manufacturing in the Republic of Ireland since 1991, employing 4500 people there. In the 1990s it opened plants in China and Malaysia, and these together account for 95% of the notebook production. More than 400,000 desktop computers per year are produced in India for local sale.
Because of the intricacy of the business setup, Dell is susceptible to changes in currency exchange rates as well as changes in market demands. Using the different manufacturing and assembly facilities allows some compensation for differing consumer requirements, and provides a cushion against any particular economy. While this can add difficulty to fundamental analysis for spread betting, the basics of technical analysis should continue to apply.
Dell Rolling Daily
The price of Dell stock can be driven by technology news and by earnings results. The current quote for a rolling daily bet is 1230.8 – 1233.2. If you think that the shares are overpriced, and due for a correction, then you might want to place a sell bet, “shorting” for £3 per point at the selling price of 1230.8. If you’re fortunate and the price falls as you expect, then you might decide to collect your winnings when the quote goes down to 1056.3 – 1058.7.
The process of working out how much you have won is simple, as with all spread betting. Your bet was placed at a starting price of 1230.8, and you closed it when the buying price was 1058.7. That means you have won 172.1 points, which for your chosen stake amounts to £516.30.
Suppose you are not so lucky, and the price went up after you placed your bet, you could keep down your losses by ending the trade when the quote goes up to 1357.1 – 1359.5. Working out your losses in the same way as above, the starting price is the same and you close the bet at a price of 1359.5. 1359.5 minus 1230.8 is 128.7 points, which multiplied by £3 amounts to a loss of £386.10.
If you ever forget whether to use the quoted buying or selling price when calculating your bet, you simply have to remember that it works to minimize your gain or maximize your loss. Your spread betting provider will always make the spread, which is the difference that you give up for the trading facility that he provides to you.
If you placed a stop loss order on this bet, you might have saved some of the loss as the spread betting provider would have closed the bet as soon as your limit was reached. Perhaps it would have closed when the quote was 1306.7 – 1309.1. In this case your loss would be 1309.1 less 1230.8 points, or 78.3 points, which would cost you £234.90.
Spread betters use the futures prices rather than the rolling daily when they expect to hold the bet open for a few weeks or months. The current price for a futures bet on Dell, Inc. is 1230.8 – 1245.7 for the far quarter. Taking a bullish view, you might decide to place a long bet for £2.50 per point, hoping that the economy recovers further and the stock price improves.
Should the market move in your favour, then you could decide to cash in your bet when the price has moved up to 1453.6 – 1467.2. Doing this, you can work out how much you have won. The bet closed at 1453.6, up from 1245.7, which means that you gained 207.9 points. You bet £2.50 per point so your winnings amount to £519.75.
You will find that the price frequently does not go in your direction, and you have to realize that spread betting or any sort of trading is a percentage game, where you win some and lose some, and your task is to come out on top overall. Say in this case the price drops, you might choose to close the bet and accept your loss when the quote goes down to 1059.7 – 1073.2. Figuring out your loss, 1245.7, your opening price, less 1059.7 at the close amounts to 186 points. For your chosen stake, this is a loss of £465.
Many spread traders decide to use stop loss orders to protect their bets from having too great a loss even if they do not have time to watch the markets. Using a stoploss order, you might find that your trade would be closed for you sooner, at say 1095.2 – 1108.6. Your starting price was 1245.7, and your closing price was 1095.2, so the point difference was 150.5. That would leave you with a loss of £376.25.