Am I missing something ! (IGIndex)

[PhilHughes]

Hope one of you may be able to help me out a little.

I'm new to spread betting, and currently trying my luck using IG index (i know wide spreads, will soon change over to Capital Spreads/ cityIndex).

At the moment I've placed a £5 a point buy on BAA (FTSE 100) June

I've watched the prices creep forward on all the quaterly bets except the Jun - which is the one I have - Can anyone explain ?
At the moment it is as follows.

Sell Buy
26/04/04 - 533 - 534
June - 524.5- 525 (why this one remains the same?)
Sept - 531 - 532
Dec - 532 - 533

Is this possibly stocks becoming ex-dividend, fell free to tell me I'm talking rubbish

All help appreciated.
Phil

 

[darrenf]

In stock futures, (and SB based on them) the longer dated contracts will always have a higher price due to "cost of carry".

As the term to expiry gets nearer, the difference between the futures price will get nearer to the underlying.

I suspect what you are observing is not the longer dated price actually moving up whilst the near contract stays the same, just the effect of the longer dates contracts having a higher price. You should find they move in tandem. ie if sept goes up 5 points, then june should also go up 5 points (generally speaking that is).

If this is not the case, and they are moving independantly of each other, let us know, I'm sure there will be an explaination (but I don't know what specific factors would cause it).

 

[PhilHughes]

Independant Mover

Thanks for the reply darren,

have a look at the picture attached - see the JUN price is lower than the other future prices and todays ?? any more ideas ?

Does anyone else know why his JUNE price isn't moving as the others and why quoted lower.

When the bet was placed they all correlated (each incremental quaterly bet was roughly 1-2 point more, they all started to move up - except JUN.

all help appreciated

 

[darrenf]

Don't know I'm afraid.

The general rule is as I've said but each contract is traded independently.

Anyone else shed light on specific reasons why this happens?

 

[TheBramble]

Doesn't one of the greeks (is this applicable to futures or just options?) decay massively more quickly within the last 45 days?

 

[PhilHughes]

I G RESPONSE

DarenF, The Bramble, - not sure what you mean by the greeks ??


anyway IG phoned me up not long after I posted the message above - they tell me that the June price didn't increase with the other future quotes, because it goes/pays ex-dividend in June!!

I wasn't aware of that !! has anyone else heard this or had similar problems - I'll compare it to other sites tomorrow,

Thanks for the response,

oh and it's nice to know those lovely people from I G are reading up on everyone.

 

[Racer]

Last year BAA went xd on 11 June, so I it is the divi priced in.
yield about 4% so about 8p div less tax?

and if you notice they all moved at the same amount anyway .. 0.5

Only read the reply from IG after I posted this...!

And yes other spreadbetters do the same

 

[PhilHughes]

ex -dividend

do you know where I can check to see when a chosen company becomes ex-dividend, so I don't make the same mistake again.

Cheers

Phil

 

[Racer]

http://www.itpaysdividends.co.uk/

 

[PhilHughes]

Dividend effect

Thanks for that racer,

any more tips on dividend payments?
are you best staying away from prices before or after dividend,

any general pattern increase/ decrease before/ after ?

I'd be expecting slight rise before hand

am new to it all - your help's appreciated.

Phil

 

[Racer]

Price usually goes down the same amount at open on xd day (a Wednesday) but it can fall further, on the other hand it can go back up! So difficult to say, depends on the individual share. And as for going up before, sometimes it does, sometimes it doesn't!

 

[splasher]

All the spread companies factor divis into the price to prevent a simple arb opportunity, which is why the general rule of further out prices being more expensive doesn't always work.
I think there is a guide on IG or Cantors website, if not the order takers can usually put you through to someone who can explain it fully. Try over lunchtime when they are less busy.

Splash

 

[Typo]

I also maintain a list at:-

http://www.stockchallenge.co.uk

Click on the Dividend Dates tab.