Unusually for me, this week's trade of the week is a short trade. I took inspiration to engage in a little more short trading from "Evil Knievel's Guide to successfully shorting stocks" in Issue 03 of Spreadbet Magazine. Not that he recommended this particular trade, but the article did remind me how my preferred position trading spread betting strategy can be run in reverse by shorting stocks.
The price of Ocado shares gapped down on Thu 26 Jun, and later in the day I realised that I could open a short position (on the assumption that it would likely fall again the next day) with a guaranteed stop order that limited my initial risk to £10 on a £1-per-point bet. As the price continued to fall over subsequent days, I trailed the guaranteed stop order as fast as it would go until today I reached the point of locking-in a guaranteed profit of at least £10 (to match my initial risk). So the worst outcome is now a £10 profit -- guaranteed -- and the best outcome is that it runs to an even higher profit. All you "high rollers" can scale up to imagine the even higher profits on a less modest £10-per-point bet or £100-per-point bet ;-)
|Chart courtesy of Capital Spreads, annotated.|
Disclaimer: this posting is for general education only; it is not trading advice.