How to Spread Bet on AstraZeneca as Share Price Falls with City Index
LONDON, April 27, 2012 /PRNewswire/ --
On Thursday morning [26 April 2012], David Brenna, chief executive of pharmaceutical giant AstraZeneca, announced his retirement following investor discontent at the company's poor performance.
Below, we look at AstraZeneca's recent decline and how investors could potentially profit on falling share prices by spread betting with City Index.
Another blow for AstraZeneca
As recently as March this year, AstraZeneca pulled the plug on a potential anti-depressant drug, costing them £31m in losses.
Only last week, Brennan - who has worked at the helm of Astra for six years - dismissed suggestions that investors were growing restless with the way he was managing the business, with intentions of ousting him.
However, Brennan is now in the press stating that his decision to step down was "totally" his own and that he had in fact been "considering it for a while".
He further clarified: "It was time to give somebody the chance to take the company to the next level. It was my decision."
Following the news, shares in AstraZeneca closed down 6.14% at 2,676p as of London market close on 26 April 2012.
How to Spread Bet on AstraZenaca Shares
With the share price falling; those spread betting are given the opportunity to profit.
One of the benefits of spread betting means investors can gain exposure to a market's movements regardless of their direction; if you think a spread bet market is going to rise - you go long and buy. Alternatively, you may think it is going to fall - so you go short and sell.
Your profits will rise in line with any increase or decrease, respectively, in that price - however, your losses will also increase if the market moves against your position.
Looking at AstraZenaca shares; say for example that it is 18 April. With recent bad news - as seen above - from the company, investors may be looking to take a position on the firm's future share price movement.
They believe that there may be more bad news in the near future for the market, so they choose to go short and sell.
In this example, the AstraZenaca Plc (LSE) DFT is selling at 2732.34 with City Index.
An investor decides to short sell a spread bet of £10 per point.
On Thursday 26 April, it is announced that the chief executive of the company has resigned - effective of June 1st.
As the investor had predicted, this makes for another blow to the company's share price and the market falls even further.
At this stage, the investor decides to cash in. The market has now fallen 15 points from its original position, so they buy back at the new buy price of 2717.34.
Therefore, they profit £150 tax free* (2732.34-2717.34 x £10 = £150).
Start Spread Betting
Open a spread betting account with City Index today and start trading on over 12,000 spread bet and CFD markets.
Remember, as a leveraged product, spread betting comes with high levels of risk and can result in losses greater than your initial deposit.
*In the UK, all gains made in a financial spread bet are currently free from UK Capital Gains Tax. However, UK Tax laws are subject to change and may differ depending on your personal circumstances.
About City Index:
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange, CFD trading and, in the UK, financial spread betting.
We constantly look to improve the performance of our platforms and expand our range of services. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support.
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