However large you think News Corporation is, the chances are that it is larger still. When spread betting you look for volatility in order to find prices that are changing and can be profited on, and News Corporation, with its propensity for self publicity, has its share of volatile trading periods.
News Corporation is the second-largest media group and the third-largest entertainment group in the world, and is controlled by Rupert Murdoch and his family and friends. It is traded on the NASDAQ, with a secondary listing in Australia where the company originated. It is headquartered in New York, and was incorporated in America in 2004.
This chart shows the weekly prices, and you can see the volatility from the length of the candle bodies.
News Corporation is actually a comparatively recent company, created in 1979 as a holding company for News Limited which was formed more than 50 years previously in Australia. In recent years, interests have expanded significantly from its newspaper base, and it includes the Fox cable TV network; many Fox TV stations, both in the US and abroad; satellite television; Fox and 20th Century Fox movie interests; newspapers such as the Sun, Times, Sunday Times, Wall Street Journal, and many others; some magazines; publishers such as HarperCollins; and the list goes on.
But most recently, News Corporation and Rupert Murdoch in particular have been in the news because of the telephone hacking scandals associated with the British tabloid press. These alleged that celebrities and public officials had their telephone accounts hacked so that journalists could obtain private information. In July 2011, Murdoch shut down the News of the World as a result of the allegations. Knowing this, you can see the dip in price which occurred at that time, but News Corp. appears to have ridden through those times with its share price intact.
News Corporation can be an interesting subject for spread betting, as long as you protect your capital from any unforeseen circumstances.
News Corporation Rolling Daily
When you come to spread bet on the shares of News Corporation, you must first decide which shares to spread bet on, the A shares or the B shares. However, this should not be a difficult decision as the prices tend to move in concert. In fact the difference when purchasing the actual shares is that B shares typically have voting rights whereas A do not, or sometimes B shares have greater voting rights than A. The price chart for A shares is at the top, and for B shares at the bottom.
The current quoted price for a rolling daily bet is 2161 – 2168. If you think that the price will continue to rise, you might want to place a long bet for £2 per point at the price of 2168.
Suppose you are correct, and the price goes up to a quote of 2326 – 2333. You could close your bet and collect your winnings, working out how much you have gained like this. Your starting price was 2168, and the bet closed at the selling price of 2326, a gain of 158 points. Multiplying by your stake, that means you have won £316.
If it did not work out, you might find that you need to close your bet to protect your capital, accepting a slight loss. Perhaps the price went down to 2056 – 2063, and you decided to get out of the trade. This time your closing price was 2056, and if you take this away from the starting price of 2168 you find you have lost 112 points. This would cost you £224.
If you don’t have time to watch the markets, you could place a stop loss order when you take out your original bet, and this will require your spread betting provider to close the bet when and if it reaches a certain level of loss. With this, you might find that your bet closed at 2103 – 2110. With a starting price of 2168, and the closing price of 2103, this time you would have lost 65 points, for a loss of £130.
News Corporation Futures Based Bet
When you spread bet, you have a choice of betting with the daily rolling bet, which can result in some charges being made each evening to your account when the bet is rolled over, or taking out a futures based bet which can be held without further charges until the expiration date. It is important to note that you can close a futures bet any time you want if the price is going against you, and you do not have to wait until maturity.
The current price for a News Corporation far quarter spread bet is quoted at 2158 – 2179. If you think that the shares are going to fall in value, you could take out a sell bet, going short for £3 per point, for example. With bad news coming out of the phone hacking scandal, you might find that the price would fall to 2015 – 2032, and you could collect your winnings. The opening price was 2158, and your bet closed at the higher, buying price of 2032. This means you have made 2158 minus 2032 points, which is 126 points, on your wager. Multiplying by your stake, your winnings are £378.
It is hard to predict the direction of the markets, and the price might easily go up after you placed your short bet. In this case, you would be faced with the reality that you had to close your bet and accept your loss at some stage, rather than losing more and more. Say the price went up to 2226 – 2242. You close your bet at 2242, so taking away your starting price you would have lost 84 points. That is a loss of £252.
Many spread traders decide to use a stop loss order, taken out when they open the bet, which ensures that the bet is closed if it turns against them. In this example, perhaps a stop loss order would have taken you out of the trade when the price went up to 2201 – 2223. Your losses would be 2223 less 2158, or 65 points, and that would have cost you £195.