Is this an opportunity to take a position ahead of the results?

Pennon reports results next Monday (24 Sept)

• The chart shows the price movement last time Pennon reported (25 May).
• The shares opened +28.8p before rising further +55.8p to close at 785.8p
• Pre-tax profit rose 25% and dividend was improved.
• Pennon will issue a Trading Statement on Monday (24 Sept)
• Recent share price range: September lows 711p; September highs 774p. Currently 728p (at time of writing).

Click to enlarge

Trading Pennon – An Example

Let’s say you think that Pennon results are likely to be good, and the share price is likely to rise. You decide to buy exposure to £10,000 worth of Pennon using CFDs, at the current price of 728p. To do this, you need £2,000.

For the purpose of this example, let’s assume Pennon reports strong results and the shares rise 8%. Your profit would be £800, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss 5% below the current price. Pennon results miss, it falls 5% and hits your stop-loss. Your loss would be £500.

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