Trade of The Week: Tesco

What was the most important news story today (5 December)? Was it something in George Osborne’s autumn statement? No, it was the news that Tesco is thinking about pulling the plug on its loss-making Fresh & Easy chain in the USA.

This was good news because it caused the Tesco share price to “gap up” this morning, thereby allowing me to raise my guaranteed stop order to a level that guarantees at least 12.6 points of profit (or £12.60 per £1-per-point bet) on the long bet(s) that I opened on 5 October.

I have added two horizontal line annotations to the following Capital Spreads chart, to show my original buying price of 309p-per-share and the current higher guaranteed stop order level of 321.6p-per-share. I could close my position(s) right now for an even greater gapped-up profit, but it’s more my style to let them run as longer-term position trades… ratcheting up the stop order as I go.

Trade of the Week on Tesco

This “trade of the week” feature is not really about how clever I was to have bought Tesco stock (just like Warren Buffett, apparently) at a good price. It’s more about managing the position(s) now that the price is rising.

With the guaranteed stop order in place — thanks to Capital Spreads, although it could have been  or IG — there is now absolutely no downside risk, a locked-in profit, and every possibility of manually trailing the guaranteed stop order for some time to come. Which means I don’t have to sell now out of fear that my profit will eventually turn to loss.

Disclaimer: this posting is for general education only; it is not trading advice.