Spread Bet on the Facebook IPO
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Facebook’s imminent IPO could be of interest to some traders.
After the floating of LinkedIn and Groupon, bankers and analysts have been optimistic about the performance of the social media website.
Spreadex is offering a market allowing investors to spread bet on the percentage change of Facebook’s shares on its first day of trading.
Spreadex spokesman Andy MacKenzie said: “This has been a popular market already with a heavy bias of buyers pushing our spread up from 50%-55% to 60%-65%.
“Spreadex clients are expecting Facebook to follow in the footsteps of LinkedIn which floated at $45 and closed the first day up 109% at $94.25.
“However, it would be wise to remember that Groupon closed its first day up 31% closing at $26.11 after it floated at $20. Zygna was actually down 5% on its first day, closing at $9.50 after floating at $10.”
Spread Betting on the Facebook Share Price
Spread betting normally offers the opportunity to buy or sell a company’s share price to try and profit from either a rise or fall in the value of the stock.
This Facebook market is based purely on the percentage change from the IPO price to the closing price on its first day on the open market.
Once the float is complete, a normal spread betting market on the price of Facebook shares will be available on the Spreadex site.
Spread Bet on the Facebook IPO
How to spread bet on the Facebook ‘first day of trading percentage change’ market:
Facebook Buy Example:
- You think Facebook shares will soar and buy at 65%
- Demand for the social network is bigger than the Mark Zuckerberg’s bank balance and they close the day up 86%
- You win 21 times your stake (86-65)
- However, should Facebook close the day 25% up you would lose 40 times your stake (25-65)
Facebook Sell Example:
- You don’t believe the hype and you sell at 60%
- Let’s say your pessimism is well founded and the shares finish the day friendless, down 6% from the IPO price
- In this case you would win 66 times your stake (60 – (- 6)
- If shares closed up 86% as per the above example, you would lose 26 times your stake (60-86)
Spreadex
For more details on Spreadex, also see:
Spreadex Ltd is authorised and regulated by the Financial Services Authority.
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Spreadex
 Apply for a Spreadex Account
Visit the Spreadex Website
Spread betting and CFD trading carry a high level of risk to your capital and you can lose more than your initial deposit.
Only trade with money that you can afford to lose and make sure you fully understand the risks involved.
These trading products may not be suitable for all investors so seek independent advice.
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"Spread Bet on the Facebook IPO" last update by R Thomas, 10-Feb-2012
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
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