LONDON, June 27, 2012 /PRNewswire/ --
The past few days has been a rough one for RBS, with the bank suffering a very public backlash following its recent software upgrade debacle.
A new week into the disaster and the bank continues to court controversy, with furious customers now threatening to walk away and Bank of England governor Sir Mervyn King stating that the bank should be subjected to a 'detailed investigation' over the IT fiasco.
Not surprisingly, RBS' very public embarrassment has triggered a loss in value of the banks share price, with shares falling by over 3% on Tuesday, June 26, whilst price comparison site Moneynet.co.uk reporting a 10% jump in hits among users searching for alternative current account providers, according to the City AM.
Yet, RBS' recent public debacle may have thrown open the profit doors for a small but significant proportion of spread betting professionals, who could find themselves profiting as RBS shares continue to fall lower still.
How you can profit from falling RBS shares
Unlike conventional shares trading, where you buy a share on expectations of its value rising and then sell for a profit once the stock's value goes up, spread betting enables you to profit irrespective of whether the price of an underlying instrument (for example a share, commodity or stock index) is going up or down.
Spread betting providers such as Finspreads offer 24-hour prices on thousands of financial instruments, including indices, shares, currencies, commodities and more.
With spread betting, all you need to do is determine whether you believe that the price of an instrument (for example RBS shares) is going to rise or fall in the coming days.
In this example, let's say you have assessed the current scenario and are fairly certain that RBS shares will fall further in the near future.
Based on this assumption, you open a 'sell' position or go short on RBS shares. If you were right and RBS' share price continues to fall, you stand to make a profit.
Once the shares reach the price at which you're willing to take your profits, you would simply close your position and take home a tax-free* profit.
If, on the other hand, you believed that RBS is now back in control of the situation and that its share prices will start to recover and rise in the coming days, you would open a 'buy' position or go long RBS shares. If you were correct and the price of RBS shares went up in recent days, you would net a profit.
If, however, that company's shares moved in the opposite direction that you expected in either sell or buy scenario, you would net a loss.
As a leveraged product, spread betting is high risk and there is the potential to lose more than your initial deposit.
Find out more about how to spread bet with Finspreads or learn about the benefits and risks of spread betting shares.
Spread betting is a tax-free* alternative to conventional trading and presents a tax efficient way of taking a position during volatile markets conditions, such as the present. Find out more about how you can take a spread betting position on over 12,000 individual markets with Finspreads.
Spread betting is a leveraged product which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
*Spread betting is exempt from UK stamp duty and Capital Gains Tax (CGT). However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.
Finspreads is a leading online financial spread betting firm, offering access to thousands of instruments on the world's financial markets.
The company pioneered fully interactive online spread betting in 1999 and continues to invest in technology to ensure that its service remains amongst the market leaders.