Telecity Group is a comparatively recently established company, with the original company Telecity Ltd founded in 1998. The share price shows good volatility in this high-tech sector and therefore is a good candidate for spread betting.
This daily price chart evidences plenty of action, with a good uptrend in the first half of the year and active range trading since then. The company is a leading provider of data centres in Europe, operating facilities in many cities such as Amsterdam, Frankfurt, Helsinki, Paris, Stockholm, and Milan, as well as its home base of London. It specializes in high-tech environments for both Internet and telephone services, and offers design, build, and management.
The company started with Telecity in 1998, and was floated on the Stock Exchange in 2000. In 2006 it acquired Redbus Interhouse, a similar company started in 1998 and listed in 2000. The name Telecity Group was adopted in 2007 and the combined company entered the FTSE 250 Index.
Recent years have seen strategic acquisitions, firstly of Internet Facilitators Limited, a Manchester company in 2010, then Data Electronics of Dublin in 2011. With other acquisitions including UK Grid, and Tenue Oy of Finland, the company now operates 32 different data centres in key cities.
The company’s customers are primarily financial service companies, cloud service operators, and content companies. By taking care of the technical side, Telecity allows them to concentrate on their primary business. The sharp drop in the chart in November resulted from the acquisition of Academica, a Finnish company, for €28 million, which the market regarded as expensive. This is a clear example of the impact of market sentiment on stock prices, as €28 million represents a comparatively small amount given the overall size of Telecity Group.
Given that events can cause such a sharp movement, when spread betting on Telecity you should be careful to limit your possible losses by appropriate bet sizing.
Telecity Group Rolling Daily
The currently quoted price for a daily rolling bet on Telecity Group is 817.5 – 821.5. If you want to bet that the price will go up in the next few days, you would place a long or buy bet at 821.5. You might choose to stake £2.50 per point on this bet.
Suppose that you are correct and the price goes up to 893.7 – 897.7. If you choose to close your bet and collect your winnings at this time, you would gain 893.7 minus 821.5 points, which works out to 72.2 points. At £2.50 per point, your winnings amount to £180.50.
On the other hand, you will frequently find that prices go in the opposite direction to the one that you intend, and you must be prepared to close your bet for a loss, rather than to risk the losses increasing by hanging on in hope. Say the price went down to 773.7 – 777.7, and you ended your trade. The opening price for your bet was 821.5, and you closed your bet at 773.7. 821.5 less 773.7 is 47.8 points, which counts against you. Multiplying by £2.50, your losses amount to £119.50.
It can be useful to place a stop loss order when you take out a bet. If you cannot watch the prices of the market all day long, the stoploss order will take care of closing a losing bet once it reaches a level that you set with your broker. Note that the stoploss order simply tells your broker to close at the then market price, and does not guarantee the level at which you exit the bet. However this is usually not a problem. With a stoploss order, you might find that this bet would be closed for you when the price dropped down to 786.2 – 790.2. Taking 786.2 away from your starting price of 821.5, you would lose 35.3 points, which would cost to £88.25.
Telecity Group Futures Style Spread Bet
If you want a futures based spread bet on Telecity Group, the current price is 817.2 – 826.7 for the far quarter. Should you think that the price will continue to fall over the next few months following disappointing results and performance, you might want to place a short or sell bet for a stake of £6 per point.
For this example, consider first that you are correct, and that the price falls down to 746.7 – 754.3, at which time you close your bet and collect your winnings. For a short bet, the bet is placed at the lower of the two prices, in this case 817.2, and it closes at the higher of the final prices, 754.3. That means that you gained 817.2 minus 754.3 points, or 62.9 points. At £6 per point, your profit amounts to £377.40.
As an alternative example, suppose that the price rose after you placed the bet, and you finally decided to close and accept your loss when the price reached 862.3 – 870.6. Your starting price was 817.2, and your closing price was 870.6. That means you lost the difference of 53.4 points, and multiplying this by your stake amounts to £320.40.
Many spread betters, and other traders, use a stop loss order to protect themselves from excessive losses. The stoploss order requires your spread betting provider to close a losing trade for you, whether or not you are watching the market, when the price reaches a level you set. In this case a stoploss order might have ended your trade if the price rose to 849.5 – 857.3. In this case, the starting price was 817.2, as before, but the closing price would be 857.3. 857.3 minus 817.2 is 40.1 points. For your chosen size of stake, this bet would have cost you £240.60.