Will this deal go wrong, or will Flybe shares rise even further?

• The chart shows the Flybe share price movements since late October.
• 22 Nov: Flybe is in talks with Virgin Atlantic about a potential takeover. (Source: Sky News)
• Shares now 12.25p (at time of writing)
• 23 Nov: Brokers at Goodbody say Virgin Atlantic might be interested in parts of Flybe but is unlikely to want the whole business.
• Will the deal be abandoned, will the deal fall through or will another even higher offer emerge to acquire the company?
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Flybe – An Example

Let’s say you think that Flybe is likely to rise further as a result of a takeover offer beyond 16.5p November highs. You decide to buy exposure to £10,000 worth of Flybe using a CFD, at the current price of 12.25p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Flybe share price rises by 10%. Your profit would be £1000, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 5% from the current price. Sentiment towards the deal sours and Flybe shares fall 5% and hit your stop-loss. Your loss would be £500.

This is provided for information purposes only. It should not be taken as a recommendation.