Lord Flasheart
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unless im missing something thats not possible. if then market is 6pts above the price then sell and buy back the futures for 6pt less. I must be missreqding what you say
barjon
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moreliver
I think you are comparing apples and pears.
A June futures price will not bear much relation to current price, although it will gradually work towards it as the expiry date approaches.If you look for the March futures quote it will be much closer to the current market price since we are nearing expiry date. So, if you buy/sell a June contract, it is the movement in the price of that contract you'll be looking at not the current market price. For that you'll need to look for the "rolling" quote from your SB and that will be close to the market price.
good trading
jon
I think you are comparing apples and pears.
A June futures price will not bear much relation to current price, although it will gradually work towards it as the expiry date approaches.If you look for the March futures quote it will be much closer to the current market price since we are nearing expiry date. So, if you buy/sell a June contract, it is the movement in the price of that contract you'll be looking at not the current market price. For that you'll need to look for the "rolling" quote from your SB and that will be close to the market price.
good trading
jon
Sunshine On Leith
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As Barjon says the discrpancy is because youre comparing the current market price to the spreadbetter guess at the price in June.
Usually the major cause of a big discrpancy in the prices will be a dividend due between now and then.
In this case it looks like a divididend is due on 2 June so thats probably the reason.
Usually the major cause of a big discrpancy in the prices will be a dividend due between now and then.
In this case it looks like a divididend is due on 2 June so thats probably the reason.
Hoggums
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You are forgetting to factor in the risk-free interest rate between now and then too,, this will currenty have the effect of lowering the future price.
Sunshine On Leith
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Which spread betting firm are you using? I have a quote for a June contract at 328.66 / 331.29.
As others have pointed out in the thread, the farther the expiry date is, the farther the quotes will be from the current market price, based on the calculations of the spread betting firm. Or, the wider the spread will be.
In any case, 312-314 seems like a huge miscalculation for me, given IPR is clearly in an uptrend.
As others have pointed out in the thread, the farther the expiry date is, the farther the quotes will be from the current market price, based on the calculations of the spread betting firm. Or, the wider the spread will be.
In any case, 312-314 seems like a huge miscalculation for me, given IPR is clearly in an uptrend.
capitalspreads
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a bit of advice on futures pricing of equities
SB companies never try to 'guess' or analyse the future price of an equity
the calculation for the mid point of the future price is quite clear... variations on the following
current price (CP)
'Limean' ([LIBID+LIBOR]/2) = interest rate between now and expiry (L)
Days to go (D)
Ex-Dividend dates between now and expiry and amount of expected dividend (V)
Mid Price should be approximately
CP+(CPxDxL/36500)-V
the interest rate component will ADD to the future price not detract from it
if your SB firm price is outside this then their price may be wrong and may be 'arbable'
BUT, be warned, several of the SB companies now only take the divvy out of the price on the actual ex-div date so there may be discrepecies between variuos companies. Check your SB company's policy.
also most SB companies will have a clause in their contract which enables them to cancel your trade or amend the entry price if they have made an error in the calculation. The most obvious error is that a dealer has put the wrong expected dividend in the formula.
the dividend is the only bit of the calculation that is 'fluid' as the SB companies cannot know in advance what a company will actually declare. most of the time they just take last years as a starting point
this said the price that u mention quoted seems wrong if the divvy is really just 8p but i would be surprised if the actual exact divvy was known for sure already (maybe they are expecting a bigger dividend)...the 2nd june is still 3 mths away
simon
SB companies never try to 'guess' or analyse the future price of an equity
the calculation for the mid point of the future price is quite clear... variations on the following
current price (CP)
'Limean' ([LIBID+LIBOR]/2) = interest rate between now and expiry (L)
Days to go (D)
Ex-Dividend dates between now and expiry and amount of expected dividend (V)
Mid Price should be approximately
CP+(CPxDxL/36500)-V
the interest rate component will ADD to the future price not detract from it
if your SB firm price is outside this then their price may be wrong and may be 'arbable'
BUT, be warned, several of the SB companies now only take the divvy out of the price on the actual ex-div date so there may be discrepecies between variuos companies. Check your SB company's policy.
also most SB companies will have a clause in their contract which enables them to cancel your trade or amend the entry price if they have made an error in the calculation. The most obvious error is that a dealer has put the wrong expected dividend in the formula.
the dividend is the only bit of the calculation that is 'fluid' as the SB companies cannot know in advance what a company will actually declare. most of the time they just take last years as a starting point
this said the price that u mention quoted seems wrong if the divvy is really just 8p but i would be surprised if the actual exact divvy was known for sure already (maybe they are expecting a bigger dividend)...the 2nd june is still 3 mths away
simon
Jack Hughes
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<< ....most SB companies will have a clause in their contract which enables them to cancel your trade or amend the entry price if they have made an error in the calculation. The most obvious error is that a dealer has put the wrong expected dividend in the formula. >>
It's a shame we're liable for your mistakes and not vice versa.
It's a shame we're liable for your mistakes and not vice versa.
