Millennium and Copthorne Hotels is a leading company in the hotel business, headquartered in London. You can see from the weekly price chart below that the shares have significant volatility, making this an interesting prospect for spread betting.
The company has been around since 1972, and came about because British Caledonian Airways bought the Copthorne Hotel near Gatwick airport. This became a brand name, and several more Copthorne Hotels were opened from 1985 onwards. There were various dealings with different companies and chains during the 80s and 90s, including buying at the Millennium Hilton in New York, and the current arrangement of Millennium & Copthorne Hotels was formed in 1995. The company was listed in the subsequent year on the London Stock Exchange.
Currently, there are more than 120 hotels in nearly 20 countries, and the Singapore investment company, City Developments Limited, is a majority investor.
While the Millennium brand is known worldwide, Copthorne Hotels are in the UK, Germany, Singapore, Malaysia, and some in New Zealand. New Zealand and the United Arab Emirates also have the Kingsgate Hotels brand. In fact, Kingsgate is the largest hotel chain in New Zealand. The properties are all upmarket, primarily four and five star.
The volatility that you can see in the chart looks very tradable. The MACD does a reasonable job of marking the up-and-down trends, and the Bollinger Bands provide their own indication. You can see that the first two times the bands narrowed, it was followed by a price breakout, in the first case downwards and in the second case upwards, and this is a typical pattern that follows from Bollinger Bands narrowing. However, they have been narrow for several months now with no real sign of a breakout, and it is likely that this pent-up pressure will result in a large move up or down shortly. The MACD seems to be remaining noncommittal on the direction.
Millennium and Copthorne Hotels Rolling Daily: How to Spread Bet on Millennium and Copthorne Hotels Shares?
The current price for a rolling daily bet on Millennium & Copthorne is quoted as 500.2 – 502.8. Assume for the sake of example that you decide the price should go up, you may want to place a long bet at the buying price of 502.8, wagering £8 per point.
If the price duly goes up, you could take your profits when the quote is 569.3 – 571.9. Your spread trade would close at the selling price of 569.3. Taking the buying price away from this, you would find you have gained a total of 66.5 points. With a stake of £8 per point, that amounts to a profit of £532. As this was a long bet on a rolling basis, you may find that there has been a small charge to your account each evening when the bet was rolled over. Unless you are hanging onto the bet for weeks or months, this usually does not amount to much.
On the other hand, the price might go down and you would be faced with the difficult decision to close your trade to prevent further loss. Suppose you closed your trade when the price went down to 461.5 – 464.1. The starting price was 502.8, and the closing price was 461.5. 502.8 minus 461.5 is 41.3 points. £8 times 41.3 works out to a loss of £330.40.
Many spread traders decide to use a stop loss order when they take out their bets. If your trade wins, then this does nothing; but if the bet goes into a loss, then the spread betting provider will close the trade for you when it reaches a level you set. With a stop loss order, this trade might have been closed at 476.9 – 479.5. That means you would have lost 502.8-476.9 points, which is 25.9 points, worth £207.20 for your chosen stake.
Millennium and Copthorne Hotels Futures Style Spread Bet
The futures style spread bet is useful if you think that you will be holding a bet open for a month or more, as there are no rollover charges associated with it. The current quote for a far quarter spread bet is 501.0 – 507.1. You might choose to stake £12 per point on a long bet, wagering that the price will go up in the next few months.
For the sake of this example, assume first that the price goes up as you had hoped, and you are able to close your bet and collect your winnings when the quote is 562.3 – 567.9. Your bet was placed at the buying price of 507.1. You closed your bet when the selling price was 562.3. That means that your bet gained 562.3 minus 507.1 points, which is 55.2 points. Multiplying this by your stake, your winnings amount to £662.40.
This time, assume that your bet failed, and that the price went down after you made your wager. Perhaps you would be able to close your losing bet when the quote is 467.6 – 473.2. With a starting price of 507.1, your closing price this time would be 467.6. That means you have lost 39.5 points. Multiplying by £12, your total loss works out to £474.
Another way that many spread betters choose in order to close a losing bet quickly is to take out a stop loss order when they place the bet. With a stop loss order, your spread betting provider will watch the market for you and close your trade when it reaches a losing level that you set. In this case the trade might have closed earlier at 481.0 – 486.4. With an opening price of 507.1 and a closing price of 481.0, you would have lost 26.1 points, and that works out to a loss of £313.20.