News Column

How Will You Spread Bet as Hurricane Sandy Shuts Down US Markets?

Oct 30 2012 12:00AM

Marketwire

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LONDON -- (Marketwire) -- 10/30/12 -- The hurricane that has investors, meteorologists and even the President spooked has finally hit New York City and surrounding areas.

The storm is expected to cause losses to the US economy to the tune of billions of dollars, and it is the first time the markets have closed due to a weather event since 1985 when US markets were closed as a result of Hurricane Gloria.

Many big players have been affected, including JP Morgan and Citigroup who are advising employees to work from home due to the severity of the storm and lack of public transport.

With all markets in the US currently closed, traders can expect volatility in other markets until New York resumes business -- with this in mind, how will Hurricane Sandy affect your spread betting strategy?

It was confirmed on Monday 29 October that the US markets will remain closed until at least Wednesday (31 October), meaning that all US stocks will be off limits to traders.

Insurers have been trading lower in Europe on concerns over rising insurance claims as a result of the likely damage caused to homes and businesses. Ultimately, traders will be looking to mitigate risk until the markets re-open in New York.

Say you believed the Wall Street index will open lower when US stocks resume trading. You could place a spread betting order to sell and go short on the Wall Street with a stake size of £10 per point, which means you would stand to gain £10 for every point the market moves below your point of entry.

However, if you were wrong and the Wall Street moved higher, you would lose £10 for every point it rallied above your entry point.

As spread betting is a leveraged product, you could net losses that exceed your initial deposit. Ensure you understand the risks and be aware the Hurricane Sandy will have created a volatile trading environment.

Spread betting, CFDs and forex trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.

About City Index:

City Index provides access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.



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Source: Marketwire


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