Staples Inc. is an office superstore chain that has more than 2000 stores worldwide. Its stock price has exhibited good volatility over recent years, with the marked dip at the time of the global economic recession, and the prices generally trending downward since the initial recovery. You can see from the chart below that this is a good opportunity for spread betters who can anticipate the moves.
Staples was founded in 1986 out of the founder’s frustration at being unable to obtain office supplies over a holiday period. It is based out of Massachusetts, and has now spread to 26 countries, opening its first store in the United Kingdom in 1992. Its current marketing idea is the “Easy Button”. Around the turn-of-the-century Staples try unsuccessfully to enter the telecommunications business, and these interests were sold on.
Staples now concentrates on selling supplies, office machines, office furniture, technology and business solutions, and has an online marketing branch, as well as selling in the physical stores. Some years ago it tried to merge with Office Depot, but this was blocked by the Federal Trade Commission which considered that this would create too monopolistic a position, and cause price increases in the long run. Office Depot continues to be competition to Staples, which also has competition from the superstores such as Walmart.
The chart above reveals that Staples is in a marked downtrend, and therefore a spread better should be looking mainly for shorting or selling opportunities. It is usually better to trade with the prevailing overall trend, although some strategies call for countertrend betting. Either way, there are a number of long candlesticks on the chart, which suggests that prices are changing significantly between the open and the close on this time scale. Should the price move to breakout above the 1600 level, the SMA(20), then you can expect a change to an uptrend, but at the moment it appears the steady downward pressure will continue.
Staples Inc Rolling Daily
Staples is an office superstore which despite extensive advertising campaigns appears to be on the decline at present. The current rolling daily spread betting price is 1253.7 – 1257.3. If you think that the price will continue to go down, you may want to place a short bet on this stock, selling at 1253.7 with a wager of, say, £3.50 per point.
Assuming first this works out, you may find that you are able to close your bet and collect your winnings at a quoted price of 1036.3 – 1039.9. As it is a short bet, it closes on the higher or buying price of 1039.9. Your spread bet was opened at 1253.7, so the difference in points is 213.8. Multiplying this by your stake of £3.50, you find that you have won £748.30.
Secondly, if this bet does not work out, and you finish up with a losing bet, you may close it to cut your losses when the price is quoted as 1403.5 – 1407.1. Working out your losses, 1407.1-1253.7 is 153.4 points. With your wager of £3.50 per point, this means you would lose £536.90.
Unless you are spread betting full-time, you may not have time to watch the markets to know when to close for a loss quickly, to avoid further losses. In this case, you should learn to use a stop loss order which will close your bet for you regardless of what you’re doing, should the price go beyond a level you set. Say you used a stop loss order on this bet, you could find that the losing trade would be closed when the price is quoted at 1332.0 – 1335.6. The closing price would be 1335.6, the buying price. 1335.6 less 1253.7 is 81.9 points. In this case, the stoploss order has helped, reducing your loss to 81.9 times £3.50, which is £286.65.
Staples Inc Futures Based Bet
The futures style bet is often better than the rolling daily for making a wager on the progression of a stock price over the next few weeks or months. Even with a futures style bet, you can close the trade at any time up to the expiry date to either take your profit or to minimize your loss. The current quote for a far quarter futures style bet on Staples Inc. is 1250.6 – 1266.8.
Assume for this example that you think that Staples will increase in value, and want to place a long bet at a price of £3 per point. As it is a long bet, it will go on at the buying price of 1266.8, the starting price for your bet. If the price goes up, you may decide to close your bet and collect your winnings when the quote gets up to 1432.3 – 1448.0. Your bet opened at 1266.8, and it closes at the selling price of 1432.3 for a difference of 165.5 points. With a stake of £3 per point, this represents a gain of £496.50.
On the other hand, prices go down as well as up and in this case you may find that you lost money. Perhaps the price went down to 1136.9 – 1151.6, and you decided that it was going to keep going down and you have to close your trade and accept your loss. The starting price was again 1266.8, but this time the bet closed at 1136.9. With a point difference of 129.9, you would have lost £389.70.
Many spread betters use the stop loss order, placed at the same time as they open a bet, to help them minimize their loss if the bet goes against them. Using one of these in this case, you might find that your bet was closed for you when the quote reached 1187.2 – 1203.6. This time your loss is 1266.8 minus 1187.2, which is 79.6 points, and works out to £238.80.