Spread bet on Ex-rights

[raysor]

Yeh thats all well and true on paper and I wasnt trying to confuse you. I just thought of someone who had rolls royce shares where the rights issue was div only shares-
but was still an incentive to buy. e.g for long term investors as I mentioned earlier.

Are you SURE it was a rights issue? Answer: No. It was in lieu of cash dividend.
Don't worry I am easily confused. Or is it that all these corporate activities are structured to confuse?

 

[Technically Fundamental]

A rights issue is basically a companys way of saying we're in the sh1t a bit and we need money your money to try to dig ourselves out anyway so IMO its always good for a short if you get in early enough.
Also breweries like marstons, punch, admiral are doomed for the next year. You watch this space

 

[Technically Fundamental]

Trading through online brokers is hard work mate. Esp when you have (relatively) low capital.

 

[raysor]

I deleted my last post because I got my dates muddled, but the gist of it was:
Market: 6/7/09 Buy 1 Marston's at 91p
10/7/09 Sell 1 Marston's at 87p and 1.1 NNP at 27p= +23p

IG 6/7/09 'Buy' 1 Marston's at 91p
10/7/09 'Sell' 1 Marston's at 87p = -4p (plus lose 27p through not getting NNP)=-31p

 

[Technically Fundamental]

Look at historical data and news releases. If a rights issue hits the news IMO you just short the stock. It WILL drop. You just need to keep a close eye on the PA immediately after.

 

[raysor]

No reply from IG Index. Will try them again Monday.

 

[sharkingtrader]

"If a rights issue hits the news IMO you just short the stock."

Absolutely correct. Always short a troubled company... Guarantee win unless you short Standard Chartered Bank or HSBC.

 

[sharkingtrader]

Been scouting the newspapers to try and find the next Rights Issue candidate to short

 

[raysor]

Got reply by email from IG today. I won't publish it as they included a no-publish request, which is fair enough. The gist of the reply says, in the event of various corporate actions, spec. dividends etc. they (IG) will endeavour to ensure that the market conditions to arise out of that corporate action will be applied to your position.
I will ask them specifically how a rights issue is adjusted and also request permission to publish their answer. Because I think this is important.

 

[foredog]

Look at historical data and news releases. If a rights issue hits the news IMO you just short the stock. It WILL drop. You just need to keep a close eye on the PA immediately after.

NO

People who are short the stock are now short the rights as well so want to close their bears and lock in profit.

If the rights issue goes ahead then the company is not in the crap anymore so the problems have diminished.

and before all the arguments start...

I've been short of stocks when the announcement came out and thought they'd go down and done my conkers.

 

[raysor]

On the subject of rights issues,many years ago, a friend of mine used to trade the NNP shares. He reckoned that there was a particular pattern in the way the price moved over the then 3 week period. Strangely enough I never bothered to check it out but he reckoned the price would usually go down initially and then rise over the last few days. Maybe an exercise for someone?
Mind you I don't know how I got the info. from him because he had a very bad stutter. Sadly he is no longer with us. He went by the grand name and rank of Group Captain George ffoliot Powell-Shedden and served as Douglas Bader's Flight Commander in 242 Squadron during the Battle of Britain. Battle of Britain London Monument - F/Lt. G S ff POWELL-SHEDDEN

 

[Technically Fundamental]

no

people who are short the stock are now short the rights as well so want to close their bears and lock in profit.

If the rights issue goes ahead then the company is not in the crap anymore so the problems have diminished.

And before all the arguments start...

I've been short of stocks when the announcement came out and thought they'd go down and done my conkers.

CFD or SB and I never said short through the rights issue. Thats why I said you need to keep a close eye on it. Should have been clearer.

 

[foredog]

My point is that many times now the stock will not have a decent drop until AFTER they go ex-rights as there are a lot of bears being closed etc