Oracle is a major American multinational technology corporation which has specialized in database software for many years. As a technology company, you can expect to see volatility in the pricing, which is what most spread betters look for when deciding on short-term betting prospects.
It was founded in 1977 in California, and went public in 1986. Through mergers and acquisitions it has expanded to computer hardware such as Sun Microsystems, which it acquired in the 2010, and is heavily involved in the current “cloud” system of database management. It has never achieved the name recognition of Microsoft and IBM in the computer field, but ranks third behind them in terms of software revenue. It now employs well over 100,000 people worldwide.
This monthly price chart shows good growth with a deal of volatility, and the predictable downturn in 2008 for the global economic crisis.
At the time that Oracle was founded, computing was in its infancy, and the founders Ellison, Miner, and Oates saw an opportunity to develop and market a relational database. Part of its success is the early decision to program using the C programming language which made it easy to transfer to different manufacturers’ systems, though it is rumoured that Oracle had to write a C compiler in order to run its database on the early IBM mainframes. Over the years such software has become extremely important to businesses, and has fuelled Oracle’s growth. The idea of a relational database has led to supply chain management software, customer relationship management software, and enterprise planning software.
You can see from the length of the candle bodies in the chart above that the price can be expected to fluctuate, and thus provide opportunities as well as risk for the spread better. As always, one of the primary focuses of a spread trader should be to preserve capital, and not allow any losses to unduly affect the account.
Oracle Corporation Rolling Daily
As is typical with companies quoted on the US NASDAQ market, Oracle Corporation is a technology company and therefore enjoys volatile pricing, which many ambitious spread traders look for when deciding which companies to bet on. The current quotation for a rolling daily bet on Oracle is 2881 – 2888. If you think that the price is going down, you may choose to wager £6 per point on a short bet at the selling price of 2881.
It may be that your bet works out, and that the price drops significantly, say to 2576 – 2583. If you think that the major move is over, then you may choose to close your bet and collect your profits. Your bet would close at the higher or buying price of 2583. Taking 2583 away from 2881, you find that you have won 298 points on this bet, which for your stake amounts to £1788.
On the other hand, frequently bets do not work out, and you may be faced with closing your wager for a loss. Say the price went up to 3106 – 3113, you might decide to swallow your losses and get out of the trade before they rose any higher. Your bet would close at 3113, which means you would have lost 3113 minus 2881 points, or 232 points. With the size of bet you placed, this would have cost you £1392.
A popular way to close a losing bet is to use a stop loss order. This is usually placed when you open the bet, and requires your spread betting provider to close the trade should it move too far, as defined by your own preset levels, against you. If you had used one of these, you might find that you would have been taken out the trade when the price was quoted at 2992 – 2999. In this case the trade closed at 2999, so the difference between this and the starting price of 2881 is 118 points. For your size of stake, that amounts to a loss of £708.
Oracle Corporation Futures
The current quote for the far quarter futures based bet on Oracle Corporation is 2888 – 2922. If you anticipate that your spread bet will take a few weeks or months to resolve in the direction that you intend, then you might consider placing a futures bet rather than a daily bet. Perhaps you think that the price is going down, and want to stake £2 per point on a short bet.
If things work out as you expect, in a few weeks you might see the price fall to 2553 – 2584. If you decide to close your bet and collect your winnings, then you can easily work out how much they should be. Your starting price for the sell bet was 2888, and the closing price was 2584, which means you have gained 304 points. At £2 per point, this amounts to a gain of £608.
But with a longer-term bet, there is more time for the price to go in the wrong direction. Perhaps the price starts out by rising to a level where you decide that you must close the bet to preserve your money. It is unfortunate, as even if you are correct about the final destination of the price, you can’t afford to risk losing too much waiting to find out. Perhaps the price goes up to 3106 – 3132, and you close the bet to cut your losses. The opening price was 2888, and the closing price was 3132, so the difference is a loss of 244 points. That amounts to £488.
You might instead have placed a stop loss order when you took out the bet, which could take you out of the losing trade earlier. If it took you out of the trade when the price quoted was 2987 – 3015, then you would lose 3015-2888 points, or 127 points. At £2 per point the losing bet would have cost you £254.