FTSE quotes in 1p, 10p, 25p or 1pound?

[Axis of Evil]

I'm confused about the quotes of the FTSE. I recently found out that option contracts on the FTSE contain a "whopping" 1,000 underlaying shares. On the Euro- or US-markets it's usually 100. The CAC even has option contracts containing just 10 underlaying shares.

Take for instance that I'm selling 1 call contract on Barclays at the FTSE. I want a covered position thus I need to buy 1,000 Barclays shares. As of this moment, Barclays rockets to a price of 350.75 (+6,6%).. here I'm getting confused. Is this pounds or a subdivision of 25p or 10p or just 1p(which I expect to be the least)? If it's pounds then there is no way in hell I could ever do this since I lack the 350 grand to buy the stock.

Looking at the FTSE quotes I notice that the Barclay share is called BARC BARCLAYS PLC ORD 25P, whilst the shares of Next is called NXT NEXT PLC ORD 10P. Does this mean the BARC quote need to be divided by 25 pence and the NXT quote with only 10 pence? (sigh) ..the further I get into the rabbits hole, the more confused i get!

Thanks

 

[arabianights]

it's pennies.

 

[Axis of Evil]

it's pennies.

Sorry, but my confusion is quite... incomprehensible! :cheesy:

Looking at BARC's price of 350.75 is in fact 35,075 pence? If that's the case, trading options on the FTSE would be totally impossible since I do not have such a stake (1,000 x 35,075p = 35,075,000 pence or 350,075 GBP).

If so, trading option on the FTSE is only a game played by the big financial institutes, is it not? Is there any particular reason why FTSE option have a 1,000 underlaying shares?

 

[arabianights]

350.75 pence

So one share is 3 pounds, 50 pence, and... er... three farthings

 

[Axis of Evil]

350.75 pence

So one share is 3 pounds, 50 pence, and... er... three farthings

Aha.. thank you for this valuable information. You've just opened a hole new box of Pandora to me, hahahaha!

 

[grantx]

Mr Evil,

A thousand Barclays at 350.75 (£3.50 ¾ = £35,750. If you bought/sold options this would be the underlying value of one contract. However, the cost of the option contract would the premium (quoted in pence) x 1000 (the standard unit or number of underlying shares of the option contract), eg 25 x 1000 = £250.

Note, however, that if the stock price is particularly high, the standard unit could be lower, eg 100 shares.

Grant

 

[Axis of Evil]

Mr Evil,

A thousand Barclays at 350.75 (£3.50 ¾ = £35,750). If you bought/sold options this would be the underlying value of one contract. However, the cost of the option contract would the premium (quoted in pence) x 1000 (the standard unit or number of underlying shares of the option contract), eg 25 x 1000 = £250.

Note, however, that if the stock price is particularly high, the standard unit could be lower, eg 100 shares.

Grant

I'm a confused ones more.. if 350.75p is £3.5075 x 1,000 = £3,507.50 per option contract. Correct or I'm still not grasping something?

And the 10p or 25p (eg. NXT NEXT PLC ORD 10P) at the end of the quote, is that the premium? Meaning for example that the NXT option has a 10p x 1,000 is 100GBP and the BARC is 25p x 1,000 is 250GBP?

 

[fibonelli]

AOE,

The 10p of Next PLC Ord 10p is the par value of the shares when they were (last) issued.

Here's a link explaining par values.

Par value

 

[Axis of Evil]

The 10p of Next PLC Ord 10p is the par value of the shares when they were (last) issued.

Oke, thanks..

 

[grantx]

Mr Evil,

"I'm a confused ones more.. if 350.75p is £3.5075 x 1,000 = £3,507.50 per option contract. Correct or I'm still not grasping something?"

No, this is the total underlying value of the option contract if the option was exercised, eg if you bought a call option and you exercised it, this is what you would have to pay to receive the underlying shares.

To buy the call option, you would pay the option premium, eg 0.25 x 1000 = £250. You buy the call option, then decide whether you wish to exercise it. You don't have to exercise the option - it can be sold back into the maket.

Grant.

 

[Axis of Evil]

Mr Evil,

"I'm a confused ones more.. if 350.75p is £3.5075 x 1,000 = £3,507.50 per option contract. Correct or I'm still not grasping something?"

No, this is the total underlying value of the option contract if the option was exercised, eg if you bought a call option and you exercised it, this is what you would have to pay to receive the underlying shares.

To buy the call option, you would pay the option premium, eg 0.25 x 1000 = £250. You buy the call option, then decide whether you wish to exercise it. You don't have to exercise the option - it can be sold back into the market.

Grant.

I see.. now I understand! Thanks for your patients and teachings, Mr. Grantx!

 

[grantx]

My pleasure, Mr Evil. May I call you Axis?

Grant.

 

[Axis of Evil]

My pleasure, Mr Evil. May I call you Axis?

Grant.

Yeah, sure.. no problemo, friend!