Merryn's Blog

Take profit on this supermarket pairs trade

A quick update on our Tesco v J Sainsbury 'pairs' trade tips in 2010.

A quick update on our Tesco (LSE: TSCO) / J Sainsbury (LSE: SBRY) 'pairs' trade tips in 2010 (you can read here about how pairs trading works using spread betting).

We suggested investors should switch out of Tesco into Sainsbury in January and again in April. Sainsbury is now up by some 12% against Tesco since the first of those tips, and by 10% since the second.

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If you're a shorter-term player, now looks a good time to take your money off the table. As the old adage goes, it's rarely wrong to take a profit.

But if you're in for the longer-term, we'd be happy to stick with this trade. While Tesco is a great company, we still prefer Sainsbury, not least because rumours of a bid for the stock are back in town.

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And even after the recent relative bounce, Sainsbury has still undershot its rival by over 85% within the last 17 years.

10-07-12-Sainsbury-v-Tesco

So it still has plenty of catching up to do!

Just to recap, if you fancy giving pairs trading a go, you can find the best spread betting provider for your needs in our comparison table.

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