Posts Tagged ‘FTSE’

After the big fall of the British banks, the oil companies have much more influence on the FTSE 100. This means that the $ against the £ and oil prices set the tone on the index.

Today the oil jumped 9% and the GBP/USD is 1.41 if the oil and the $ can keep this level I would say that the FTSE 100 can go back to 4000 mark very quickly. And in my opinion the oil price on the long run will go up. After all as far as I know it is the most needed commodity and although the green revolution there isn’t any decent substitute to the black oil. So perhaps the FTSE 100 is not all gloom and doom after all.

Hi all,

After black Monday where the Dow hit a new low, it seems that the market is searching for direction. It moves up and down between 7150 to 7400 and change direction very quickly.

This is a good market for short trade because no matter which direction you will choose there is a good chance that if it went against you, it will come back very soon (in a matter of hours in fact). You can see it clear on the graph:

it is the same story with the FTSE. The market is on hold and tries to learn what Obama will do next. But it seems that every time that Obama says something the Dow is down. It is not a bad strategy to sell when he speaks you just need to know his agenda.

I think that the Dow will test a new low around 6500 before it will move up to the 7400-7500 region. But times like this it is hard to predict.

…and I am in the FTSE. 19:56 the Dow reached a new low 7150 and the FTSE was already 1.7% down so I thought to limit my risk and opened a long position on the FTSE. I was sure that the Dow will bounce back. But it didn’t. In fact it went down. Through all the day I was looking for the bottom. And each time it went more down. I even ordered to buy it at 7199 and canceled it because I had a bad feeling.

So what do you do with a trade that went against you? I left it open. After all I am only 15 points down, but at some point I was 33. But it is not promising. The S&P 500 broke the 750 support and the down lost 1200 points in less then 2 weeks. But markets don’t go down in straight line and I am sure I will be again in the money, but it is a risky business.

I am going to sleep not happy with my position which is not good…

Yesterday I recommended to take the 4100 PUT option Feb 09 on the FTSE. The price was 59. Now it is 93 and it was during the day 141! those who took my advice had a nice profit and it could be more.

Did I take it? no. No? no. Why? because… it was late I was tired and god knows why.

Instead this morning I bought a 7740 CALL option on the DOW at 42. I though the DOW was way too down in the pre-hour market and I hoped it will bounced back. So I bought it when it was 7680. Now (19:30) hour an half before closing time my option worth nothing.

That’s ok sometime you lose sometimes you win. But my mistake was not to hedge my position. On that time I could buy the 7640 PUT at 55. Now it worth much more and it would cover my losses from the CALL. It is true that when you hedge your position you limit your profits but it is better to have little profits than big losses.

In the bottom line it is all depends what you are looking for. For me if I can make 10%-15% on each trade I am happy. For some they are looking for much more. But then when they lose they lose more.

Hi all,

if you believe that by the end of the week the FTSE 100 will head to the 4000 direction (which I do) this is the time for you to but the 4100 put of Feb-09 which expired on the 20/02 10:00.

At the moment the price is 59 while the FTSE stands on 4134. Another red day tomorrow and the option will worth much more. You can easily make 20%-30% with low risk.

For example in the morning when the FTSE was higher the price was 46 in the evening when the FTSE went down the price of this option jumped to 59. 28% in less than a day.

It is quite common to go long or short on an index like the FTSE. But is it smart? would it be better to use options instead?

Lets check… The FTSE closed today at 4234. Now lets say you want go long and you think that the bottom is around 4000. So you open a position with stop loss around 3980. Meaning you are risking 254 points or 6%. Your aim is to have 10% profit or 420 points (4654)
Now lets check different scenarios:

1. The FTSE goes to your direction and by 20 of April it reaches your target and close the position with 10% profit.
2. The FTSE goes to your direction but doesn’t touch your target and you decide to close the position somewhere in the middle with 5% profit
3. The FTSE goes down and hit your stop loss. 10% loss

Now lets check what would have happened if instead of buying the index directly you would bought an option. The call option of 4650 for April cost 64 points to buy. Lets check the scenarios again:

1. The FTSE goes to your direction and reaches your target. In this case your option will be worth much more. It depends how close the expiry date is, but in some cases your option could worth 300 points. 468% profit.
2. The FTSE goes to your direction but not touches your target. Still your option will be worth much more. So if for example in beginning of March the FTSE will be around 4450 your option will be worth around 120 points. So you sell it before it way before it is due to expired. 100% profit.
3. The FTSE goes down – your options worth nothing and you lost 64 points or 100%.

As you can see your profit can be much more and the loss is less (although you lost 100% you risked less points) but more important is that the market moves up or down. With option you get the chance to stay in the game with low risk even if the market goes against you. Because you risked only 64 points. If you bet on the FTSE directly and decide to take the risk without using stop loss you risking much more and you could end up losing lots of money. With an option you just limit your potential losses and maximise your profits.

If you use it smart you can gain nice profits.

Hi all,

I found a platform that offers a very impressive range of binary bets on financial products. The good thing about binary bets is that you always know how much you can loss, and how much you can win. There is no in between…

So BetOnMarkets developed a really nice platform where you can set how much you want to win, on what you want to bet and they calculate the price of the bet.

For example: I think that for the next two months the FTSE will not go down below 3600 and will not go more than 4800. So I choose Indices and then boundary bets – barrier range. Now I enter that I wish to win £1000 in the next 60 days (ends on the 31/03) and set the high and the low barriers and click price this bet. I get that the price for this bet is £575, and the net profit could be £425 which are 74% profit. You also get a graph that illustrates quite well your bet.

So I know that I can lose £575 if during the next 60 days the FTSE touches my barriers. This is really nice and they have lots of products like this. In fact this is the first time that I see such range of exotic product for the small trader.

Now if you want to open an account with them enter the word Shares as promotional code and you will get £20 credit. By the way I am going to open the position that I mentioned above.

Have a nice weekend!

Hi all,

To be honest I thought that Wall st will react better to the new president. I thought that Mr Obama will come with a great speech that will carry Wall st with great optimism all the way up. I was wrong.

When Barak Obama made his speech, the Dow was around 8150 soon after it went down to 8100 and then all the way down to 7950. Great start. So if Obama didn’t understand the task in front of him now he does.

But with banking sector near collapse some analysts talk about the Dow around 6000 and the FTSE has 2 at the beginning. My advice is calculate your risk. If you still want to go long on the market buy put option. Just in case. But put options are expensive these days because no one can see good news in the near feature.

I know that I am willing to take a risk and going to buy Barclays if they touches 65p. At the moment it is 72.95 so I am not far. But this is for long term investment. I think they are one of the few that have a chance to get it through, and if they do, the sky is the limit for this share.

Hi all,

The FTSE is continue to go down for 6 straight sessions. Today the FTSE went down to 4295 and now it is recovering a bit to 4305. If I was smart enough to follow my words on Sunday I would by now 150 points profits.

But I didn’t…

Why? because I am already expose to the FTSE by 2 options that I bought and I didn’t want to take more risks. It will be

interesting to see when the market will recover. I am sure it will soon.

Down. Don’t be mistaken by the strong opening of 2009. More bad news will come and although the market was indifferent about them during December it is unlikely that investors will continue risk their money.

You can check the options prices to see the direction. At the moment the FTSE100 is 4448. The 4000 put for March will cost you 152 points, while the 4800 call for March is just 109 to buy although the FTSE is closer to the call than the put! This means one thing, the direction is down.

How much down? This is the million dollar question. It is all depends how bad the news will be.