At £1000+ Per Point, Which SB Company is Best for Intra-day Trading ?

[jkplay]

JK,

I know how hedging works. I’m looking for a specific example, and why SB and not a corresponding market: “If it can hedge efficiently...”

Grant.

1. You own 50000 shares in Vodafone and don't want to sell them and use up your tax allowance until the following tax year. You then sell £500pp of VOD through a spreadbetting firm and you have got out at the current market price and not payed any stamp duty or tax.

2. Your American father recently passed away and he left you $1,000,000 in his will but you won't get the cash until march. You then lock in a march forward contract to protect yourself from any adverse price movements and lock in the current rate.

3. You are a farmer growing a crop of wheat/corn which will not be ready until June so you lock in a price now.

As I said there are many examples..

I think the low deposit rates and lack of tax make it the most attractive - but all this is going slightly off topic now isn't it?

JK

 

[jkplay]

Not sure Goose's figures refer to the futures.

YM is $10, full Dow contract is $25. So £1000/pt would be about 200 or 80 lots respectively which would go through the market reasonably easily.

But that's the whole thing that's misleading about this £1000/pt argument. On the Dow you're looking at an underlying exposure of £13.25m. On the S&P it's £1.5m. On a stock trading at 50p, its £50k. I've used > £1000/pt bets previously when taking positions in UK stocks, but that's very different exposure to £1000/pt on the Dow...

I think you have to be both minted and brave to trade £1000pp on the Dow!

Anybody else get scared at £25pp??

The fact is it can be done if they can hedge it in the market. I don't know why everybody is so concerned about how spreadbetting firms's hedge their books. If you trade that size then you would want to meet the person who will be managing your account and working your orders for you to go through it in some depth.. I imagine??

But most traders who aren't multi millionaires shouldn't worry about hedging policies. As long as you can trade why worry what happens after?

Just my $.02

JK

 

[TheGoose]

JK

I'm glad you've said that and agree with it all. It also makes me wonder why so many people are interest in Direct Access for indices. When i trade myself from home i don't have it and I don't think it is essential at all.

Also, you say you have to be 'minted' but don't forget the orginal poster said it would be for his associates. We have no idea how many of them there are. it could be for a fund of 50 people each putting in £10

GrantX
Procedure is simple. Client wants to sell £1000, we allow £500 and work the rest. If it drops, the client can lower his limit but we'll stay on the phone and communicate what we can do.

If the client gives us a limit to sell above or buy below, there's obviously complete transparency. If it goes through, he's filled regardless of what we decided to stick on the bid or offer. If it only touches we would give what we got but round it up to nearest £100, This goes back to Steve's point about the price moving away, but if we 'chance' it and get better fills we often go back with improvements.

Ian

 

[grantx]

Ian,

Thank you for clearing the point.

Grant.

 

[mindset]

I phoned IG Index up and asked them whats there max level and they said whatever we have recently done trades at 30k a point, I think they hedge all their positions anyway...

 

[Trader333]

At that level they certainly do.


Paul

 

[tar]

I phoned IG Index up and asked them whats there max level and they said whatever we have recently done trades at 30k a point, I think they hedge all their positions anyway...

Maybe this for something like Vodafone shares not for indices

 

[atrim]

Wasn't it the millionaire owner of some football team who lost a bet with IG at £30k per point on HSBC or something?

 

[simcom]

Wasn't it the millionaire owner of some football team who lost a bet with IG at £30k per point on HSBC or something?

Indeed. Here's the link: Sport: Ashley's a loser

£300,000 a point on HBOS it seems - crazy stuff! For some, anyway.

 

[Victor90]

Indeed. Here's the link: Sport: Ashley's a loser

£300,000 a point on HBOS it seems - crazy stuff! For some, anyway.

HAHA!!! And i feelt bad for losing £100 on Tbonds when i started trading! haha