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For those that really like a punt....

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Sands - What Drxsyter said, I think Barclays have a decent trading platform too where you can buy.T here are some cheaper ones too but most occasional user feel better with a name. Now if you're really brave you can do a CFD or spreadbet on the share price which will give you more leaverage....but it also is partly why we are in the sh!t we are in!!! If you want to do that IG Index is ok...but that's more scary!! Infact, forget it...just buy some shares...I think they've a good chance
Sandperson

Sandperson

Posted
Posted
Thanks for the advice. I've registered with Interactive Investor so just got to wait for the paperwork to come through. I kind of understand the principles of spread betting from Sporting Index and Betfair but I think it's a quick way for a fool like me to be parted with my money quickly.
  • 2 weeks later...
Jeremy

Jeremy

Posted
Posted

OK, hence my get-out clause of "I've not checked to see what's being offered". I admit I know relatively little about the consumer industry, spread-betting, etc.


However, options do not require a margin... and even if nobody was issuing new contracts, surely there are exchange-traded options out there for RBS and other banks?

  • 1 month later...
snorky

snorky

Posted
Posted

Jeremy Wrote:

-------------------------------------------------------

> OK, hence my get-out clause of "I've not checked

> to see what's being offered". I admit I know

> relatively little about the consumer industry,

> spread-betting, etc.

>

> However, options do not require a margin... and

> even if nobody was issuing new contracts, surely

> there are exchange-traded options out there for

> RBS and other banks?



Options are great if you want to to silly punts of absurd products - eg a short dated ?5.00 call on RBS will be almost zero to buy - nominal.


anything that is a decent delta will reuire a hefty slab of up front investment



the beauty of options , is that you can effectively go short without having to go through the arsewipe process of stock borrowing or treading dangerously in an illiquid index site



Pub bores may waffle on about black scholes, but theyse muppets innit, cos they doesnt take account of some aspect of volatility bludz

matthew123

matthew123

Posted
Posted

For the small private investor, Covered Warrants (same principle as Options but cheaper in size) are a good investment stratagy if you think an underlying stock is going to move up or down from a Covered Warrant strike price before it's maturity date. As with Options, the Covered Warrant although cash settled, gives you the right but not the obligation to buy the underlying stock at a fixed price. Your maximum loss is the one off premium you pay for the Covered Warrant plus any Broker trade commission.


The further out of the money and less time to maturity the cheaper the Covered Warrant. For instance today you could have bought a Goldman Sachs RBS Call from your Broker at a strike price of 80p for 0.93p with a maturity of June 09. Now if tomorrow RBS suddenly shot up to 80p* then your Covered Warrant would, in theory, fly up to at least a tad under 80.93p. So overnight the value of your Covered Warrant would have increased by 87 times. A ?1,000 investment would suddenly be worth ?87,000 - whereas if you invested your ?1,000 in the actual RBS stock (30p) it would then be worth ?2,666 (80p a RBS share).


Of course if the RBS never reaches 80p before June 09 then you lose your ?1,000 on the Covered Warrant (unless you sell it before expiry) - whereas if you bought the RBS stock outright then it would retain some value depending on actual RBS price.


* This is purely to aid the example

matthew123

matthew123

Posted
Posted

Yup it is a very long shot and wouldn't recommend anyone using that example as an investment decision as you'd probably be better off putting it all on Porto to beat Man U at Old Trafford Tuesday night!!


BTW, the example I used is actually a Societe Generale RBS Warrant not Goldman Sachs.. if anyone interested in seeing how much the RBS warrants fluctuate each day - http://uk.warrants.com/services/quotes/search.php?family=WARRANT&typeul=SHARE&ullabel=RBOS

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