How to Spread Bet After Moody's Cuts Ratings on 15 Global Banks

LONDON, June 25, 2012 /PRNewswire/ --

Spread betting enables you to take advantage of sharp moves in a range of financial markets such as shares, indices and currencies.
News, such as the announcement by Moody's on Thursday 21 June 2012, that they have cut their credit rating on 15 global banks after the US trading session, can create multiple opportunities to spread bet the financial markets for profit, with the added bonus that all gains made in a spread bet are currently free from UK Capital Gains Tax*.

Net a Profit from Market Reaction

Moody's cut their ratings on 15 global banks including Barclays, Morgan Stanley and UBS by between one and three notches (21 June).
Typically, ratings cuts by agencies such as Moody's are met with a bearish reaction by the markets directly affected, but given the fact that the Moody's ratings cuts was well leaked into the markets in the run up to Thursday night's announcement, European banks such as Barclays, Lloyds and HSBC all saw their share prices rise when trading started again on Friday morning.

In addition to this, there had been fears that the ratings cuts could have been even worse than what was announced, giving some banking shares a lift.

Spread betting can be the perfect tool to take advantage of the market's reaction to news announcements such as the one by Moody's.

Going Long on Barclays Shares

Following Moody's announcement, if you believed that the share prices of banks would rise when trading started the following day, you could go long and your profits would rise in line with every increase in that price.

In this case for instance, Barclays initially opened lower on Friday morning, reaching a low of 195.75p - before finding support.

This helped to push Barclays shares into positive territory as the session progressed.

Had you foreseen this, you could have netted a tidy tax-free* profit by spread betting.

Had you gone long on Barclays shares at 196p by £10 per point and then subsequently closed your spread bet when prices recovered to 204p, you could have netted a tax-free* profit of £80 (204p - 196p x £10).

Of course, had the price of Barclays shares continued to tumble to 188p, a loss of 8p, you would have netted a loss of £80 (196p - 188p x £10).

Why Start Spread Betting?

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.

About Finspreads:

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.