For the Vodafone fan

Scenario 1 for the Vodafone fan

You hear a whisper, read a news item, see a new phone model, whatever - something starts the old brain cells jingling and, after thoroughly researching the situation, you believe the Vodafone share price is currently under-valued. You believe the price is going to go up in the near future.

The Spread price quoted is 136 - 137 and you decide you want to wager £10 per point. Your bet starts at the 137 price.

Two weeks pass and the Vodafone Spread price has risen to 156 - 157. Gadzooks! You were right, what a clever bunny you are. Also, as you are not a greedy bunny, you decide to close the bet. The payout is based on the 156 figure, which means you have a 19 point increase which, at £10 a point equates to £190. Not a bad profit in two weeks.

BUT LET'S JUST SUPPOSE…

Scenario 2 for the Vodafone fan

Same situation. You fancy Vodafone and believe the 136 - 137 Spread undervalues the stock. You wager £10 a point and your bet starts at 137.

Oh dear! Fickle Mr. Market has confounded your confident prediction. The Vodafone price has dropped to 116 - 117, which triggers your 15 per cent stop loss. Your bet is automatically closed which means you have to sell at 116 so you have lost 21 points at £10 a point, a total of £210.

The only good news here is that you arranged an automatic stop loss, thereby limiting your potential losses. (Triggered stop losses mean you sell at the next best price.)