Cisco Systems is a multinational company headquartered in California, and quoted on the NASDAQ exchange. As a technology company, it can provide the volatility that many seek in their spread betting. Its principle business is networking equipment, providing computers with the communications necessary for company and worldwide interaction. It was founded back in 1984, and its name derives from the city San Francisco. The company went public in 1990, and rapidly found success developing and selling dedicated network nodes, solving the problem of multiple network protocols with its routers. It was not the first or only company in this marketplace, but is certainly the most successful.
During the dotcom boom, in the year 2000, Cisco had the distinction of becoming the most valuable company in the world, rated at $500 billion. Even now, its value is about $100 billion.
As you can see from this monthly price chart, growth has not been consistent, and the price illustrates the typical volatility of a technology company. The global economic crisis is reflected in 2008, with the price more than halving, and it has never achieved the same level again. Networking is one of the workhorse areas of technology, not providing the excitement of touchpad or smartphone development, but it is a crucial aspect of today’s connected environment, which means that profits are relatively steady.
A reflection of this is the fact that the stock was added to the Dow Jones Industrial Average in 2009, as well as already being included in the S&P 500, the NASDAQ 100, and other indices. The Dow Jones is a particular achievement, as since 1928 the index has included only 30 companies at any one time, with major companies rarely dropped to allow new ones to replace them. However, the company was financially challenged in 2011, and forced to eliminate thousands of jobs.
Cisco Systems Rolling Daily
Being in the technology sector, Cisco Systems is a volatile stock, which gives a spread better plenty of opportunity for profit. Of course, this also means that there are opportunities for losses, and you need to be prepared to minimize your exposure to these. The current quoted price for a rolling daily bet is 1636 – 1640. If you think that the price of Cisco shares is going down, you could place a short bet, selling at 1636. Say you staked £4 per point that the price falls.
Taking first the case where you are correct, and the price falls to 1397 – 1401, you could close your bet and collect your profit. Your bet went on at 1636, and it closes at the buying price of 1401, giving you a gain of 235 points. Multiplying this by your stake of £4 per point, your profit would be at £940.
But more of the time than you would hope you will find that the market goes in the wrong direction, and you are faced with closing the bet and accept your loss. Say the price went up to 1815 – 1819, and you decided to close the trade to prevent further loss. Your starting price was 1636, and your bet closed at 1819, which is a difference of 183 points. As you staked £4 per point, you would have lost £732.
One of the ways to make the best of your profit is to keep down your losses. To do this, you could place a stop loss order when you open the bet and this would take you out of a losing bet quickly, and may save you some of the loss. Say you did this and you exited the bet automatically when the price went up to 1705 – 1709. This time your closing price is 1709, and taking away the opening price of 1636 you would have lost 73 points. Multiplying this by your stake, you would lose £290.
Cisco Systems Futures Bet
Cisco Systems is considered by some to be the major networking company, and they certainly have a reputation in the industry. Because they are in the technology sector, you should expect volatility which can work for or against you when you are spread betting on the share price. The current price for a futures based bet for the far quarter is 1600 – 1615.
Suppose that you think that the value of the shares will go down over the next few weeks or months, you may be tempted to place a spread bet for £5 per point on the selling price of 1600, taking up a “short” position. If it works out for you, perhaps the price will drop as far as 1457 – 1471, and you will decide to close your bet and take your profits.
To look at how much you have made, you first have to calculate the number of points that the price moved in your favour. Your sell bet was placed at 1600, and it closed at the buying price of 1471. 1600 minus 1471 is 129 points. For the wager that you placed, this works out to £645 profit.
The markets are hard to predict, and often you will find that the price moves against you. Say it went up to 1687 – 1701, and you decided to close your bet and accept your loss. Your starting price was 1600, as before, but this time the bet closed at 1701. That means it moved 101 points against you, which would cost you £505.
Many spread betters decide to use a stop loss order, which will close a losing bet at a predetermined level whether or not you are watching the markets. Perhaps with one of these your bet would have closed earlier, at 1653 – 1669. The number of points against you now is 1669-1600, or 69 points, and that would amount to £345 lost.