Best Thread Capital Spreads

[bracke]

capitalspreads

A couple of questions if I may.

1 Am I permitted to be long and short of the same instrument at the same time, in the same account?

2 What is the system by which you adjust a share price to reflect the dividend. ie If I am long does the price suddenly drop when the share goes ex-divi?

My apologies if you have previously answered these questions but this a long thread to go through on the chance that you have.

Regards

bracke

 

[Jbat001]

capitalspreads

A couple of questions if I may.

1 Am I permitted to be long and short of the same instrument at the same time, in the same account?

2 What is the system by which you adjust a share price to reflect the dividend. ie If I am long does the price suddenly drop when the share goes ex-divi?

My apologies if you have previously answered these questions but this a long thread to go through on the chance that you have.

Regards

bracke

Can't answer your question number two, but question one is, unfortunately, a resounding no.....

 

[The Pear]

Brake -re couple ogf questions.

1. The only company I know that does it is IG (although there may be others)

2. Most companies normally factor dividend into the futures price (apart from rolling bets) so if VOD has a divi before now and when Dec contract expires it will factored in and will not 'drop' when share goes ex d

 

[Visaria]

May I ask why you would want to be long and short the same instrument at the same time and in the same account?

 

[bracke]

Jbat001 & The Pear

Thank you for your replies but I would like to hear it from the horses mouth or rather Simons fingers.

Visaria

To take advantage of short time frame opportunities without closing a slightly longer time frame trade.

Regards

bracke

 

[capitalspreads]

run the numbers

we have no upper limit as to how much gets transferred between bank accounts but you may find that your own account does.

brake

the only way you could make an equal and opposite trade would be to trade in different expiry dates in the same market. Most markets have rolling and next two quarterlies (at least). But I am with Visaria here.. all you are doing is opening two trades and paying us the spread on both. Very nice for me as I have no risk and have made an immediate profit.

on dividends Pear is half right in that on the quarterly markets the dividend is in the price already so there should be little to no effect on dividend payment date. On Rolling Bets we will pay 80% of the dividend to a client with a long position and the share will probably open the full dividend amount lower on the next opening. In rolling markets we merely quote around the current market price so if the price falls or not on ex-div date is entirely up to the market itself.

In a totally efficient marketplace if the dividend were 10p then the price should drop by this on the morning after ex div but in many cases it does not.

Simon

 

[bracke]

run the numbers

we have no upper limit as to how much gets transferred between bank accounts but you may find that your own account does.

brake

the only way you could make an equal and opposite trade would be to trade in different expiry dates in the same market. Most markets have rolling and next two quarterlies (at least). But I am with Visaria here.. all you are doing is opening two trades and paying us the spread on both. Very nice for me as I have no risk and have made an immediate profit.

on dividends Pear is half right in that on the quarterly markets the dividend is in the price already so there should be little to no effect on dividend payment date. On Rolling Bets we will pay 80% of the dividend to a client with a long position and the share will probably open the full dividend amount lower on the next opening. In rolling markets we merely quote around the current market price so if the price falls or not on ex-div date is entirely up to the market itself.

In a totally efficient marketplace if the dividend were 10p then the price should drop by this on the morning after ex div but in many cases it does not.

Simon

Simon

Thank you for your reply.

I understand your logic relating to opposing spreads in the same instrument. Are you saying that there is never an occasion when it may be worthwhile to keep one trade open whilst taking advantage of a short term trade in the opposite direction?

On the basis of your reply it appears that before opening a rolling trade on a share it may be a good idea to check if it is about to go ex-divi during the time that you expect to keep the trade open.

Regards

bracke

 

[capitalspreads]

brake

i can understand the psychology of wishing to keep a trade open whilst 'hedging' over a difficult period ... but from a purely financial point of view you should just close the existing trade and then reopen it at a later date / time, rather than make an equal and opposite trade as it costs money to keep positions open. So if you have two positions you will lose on both on cost of carry (a minor amount each day). And from a trading point of view , you now have two positions to make decisions over rather than just one.

on dividends it is always advisable to check on ex div dates not just in spread betting but in 'real' equity trading as well. The market can be very odd. sometimes a dividend gets paid and the market falls far less than the div amount and on other occasions you get the opposite effect.

Simon

 

[bracke]

brake

i can understand the psychology of wishing to keep a trade open whilst 'hedging' over a difficult period ... but from a purely financial point of view you should just close the existing trade and then reopen it at a later date / time, rather than make an equal and opposite trade as it costs money to keep positions open. So if you have two positions you will lose on both on cost of carry (a minor amount each day). And from a trading point of view , you now have two positions to make decisions over rather than just one.

on dividends it is always advisable to check on ex div dates not just in spread betting but in 'real' equity trading as well. The market can be very odd. sometimes a dividend gets paid and the market falls far less than the div amount and on other occasions you get the opposite effect.

Simon

Simon

Thanks for the reply, it is appreciated.

Regards

bracke

 

[Visaria]

Bracke,

If you really want to do this sort of thing, you could have two accounts, one a main account and another a sub-account. Nominate one for long term trades and the other for short term stuff. I have done this (with another SB, not CS) but I don't trade the same instrument for the same expiry in both. Rather the long term account might hold, say positions in quarterly contracts, for example a short in cable which you intend to keep for some time and the short term account might be used for quick trades in daily cable.

visaria

P.S. Of course, you can do the whole lot in one account, two accounts might make it easier in terms of tracking, admin etc

 

[bracke]

Bracke,

If you really want to do this sort of thing, you could have two accounts, one a main account and another a sub-account. Nominate one for long term trades and the other for short term stuff. I have done this (with another SB, not CS) but I don't trade the same instrument for the same expiry in both. Rather the long term account might hold, say positions in quarterly contracts, for example a short in cable which you intend to keep for some time and the short term account might be used for quick trades in daily cable.

visaria

P.S. Of course, you can do the whole lot in one account, two accounts might make it easier in terms of tracking, admin etc

visaria

Thank you for your suggestion. It is not something that I want to do on a regular basis, in fact hardly ever. A situation arose recently where I considered takiing such a trade. If the situation occurs again I will use a different time frame for the same instrument.

Regards

bracke

 

[romik]

capitalspreads



1 Am I permitted to be long and short of the same instrument at the same time, in the same account?

bracke

What is the benefit in doing that?

 

[romik]

CS Site is down, impossible to log-in.

 

[bracke]

What is the benefit in doing that?

Suggest you read the posts above which relate to my reasons. It revolves around my desire to keep a longer trade open whilst taking a shorter term trade in the opposite direction.

Regards

bracke

 

[minx]

The easiest way to do this is to record them as different trades in Excel. Then you can have your long and short and be able to keep track of what is going on.

 

[The Pear]

push trades - from brake

The other thing is about crystalising gains / losses. if you are long a contract and want to short it you may not want to crystalise a loss / gain (which will affect your cash balance) This is the other main factor along with different time horizon trading.

 

[capitalspreads]

pear

good point.... i forgot about that factor.

simon

 

[karmit]

CS Site is down, impossible to log-in.

hmm... I'd posted a reply on this... wonder where it went?!

 

[romik]

Quote vs chart data

Does anyone else experience quote/chart inconsistencies, I am not even talking about other source data, today it's all screwed up.

 

[bracke]

Does anyone else experience quote/chart inconsistencies, I am not even talking about other source data, today it's all screwed up.

Simon has replied to this query in the past. He said that it is the quote that counts and that the graph may be slightly out of kilter with the qupte.

Regards

bracke