Will Drax continue falling, or will it rise again back to recent 433p highs?

• Drax shares have fallen over 12% in the past 2 days to trade 378p (at time of writing).
• Shares -12.7% from 2018 highs; +73.4% 2018 lows; +39.5% year-to-date.
• 16 Oct: Company agreed to acquire Scottish Power Generation from Iberdrola for £702m
• Drax will have to finance the takeover with new debt.
• Can the stock regain recent highs?
• Source: Dow Jones, Bloomberg, FT, Company News

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Trading Drax – An Example

Let’s say you feel that the stock is a bargain and you think it could bounce back to recent highs of 433p. You decide to buy exposure to £10,000 worth of Drax using a CFD, at the current price of 218. To do this, you need £2000.

Let’s assume Drax recovers back to 2018 high of 433p (+14.5%). Your profit would be £1450, from your initial investment of £2000.

Conversely, let’s assume you open the above position, and place a stop-loss at 7% from the current price. Drax falls 7% and hits your stop-loss. Your loss would be £700.

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