Argo Blockchain (LON: ARB) (NASDAQ: ARBK) has long been a favourite of a certain group of share traders. It's just one of those stocks which seems to have captured the imagination. Given that it's up 122% year to date this might seem fair enough too - but it's also down some 80% year on year which is less exciting. Unless you've been short that is. But then it's price volatility - changes in price - which are what traders are interested in. A steady, dividend paying, stock isn't the point at all when trading. Rather something with price moves that can be moved in and out of.
The other requirements for a good “trading stock” are a relatively low spread. That's the difference between the bid and offer prices, which is a synonym for how much money we've got to give the market for the privilege of being allowed to trade the instrument. Argo Blockchain's spread is currently half a pence which is about 3.5%. Not tiny but not bad for a company of ARB's market capitalisation. It being one of those things that the more trade there is in a share then the smaller the spread will be. Argo Blockchain is also up 11.7% today meaning that anyone who bought last Thursday and sold today is up on hte transaction by some 9% (the price change minus that ARB spread) which isn't bad at all for a trading situation.
Argo Blockchain share price from London Stock Exchange
The other two things we might want in a share to be trade - not invested in, but traded - is that there be a regular stream of news which might prompt price changes. For Argo Blockchain that's the monthly report on coins mined. That February report had 5.7 BTC mined a day for example. OK, it's easy enough to then look back at previous mining expenses then compare with the Bitcoin price in that month. That gives a likely idea of income and so profits - if any.
Which gives us that other desirable in a trading share, which is that it's a proxy for some other price. Here it's a geared option on the Bitcoin price. BTC goes up then Argo Blockchain profits go up significantly, as the price increase will flow through straight to the bottom line. The same will be true of BTC price declines as well of course. But here's the advantage - instead of having to deal with FTX, Binance and all that, we've an instrument traded on a safe market like the LSE.
Which is really why that volume in Argo Blockchain, so much volume that this morning it's the tenth most traded LSE stock - despite being such a tiddler. It's that leveraged option on BTC in a safe contract form.
