Ig index spread betting

[johnson36]

Anybody on here interested in chatting about spread betting? Just wondering if anyone here is buying call options on Dow Jones and FTSE

[johnson36]

Ftse came down from 7100. December 17th Call options for 7000 are at 10 on IG is it worth a go ?

[alocacoc]

Since the imp. vol. is quite high at the moment, i would rather sell premium to benefit from the time decay and falling vol if you want to bet on raising prices.

If you buy FTSE / DAX Calls you would give up a decent amount of the premium when these markets recovers. Even then when the trade going to be profitable. Due the high vol you could sell put spreads far out of the money with a high probability of success and still get paid a nice premium.

Edited August 26, 2015 by alocacoc

[johnson36]

Since the imp. vol. is quite high at the moment, i would rather sell premium to benefit from the time decay and falling vol if you want to bet on raising prices.

If you buy FTSE / DAX Calls you would give up a decent amount of the premium when these markets recovers. Even then when the trade going to be profitable. Due the high vol you could sell put spreads far out of the money with a high probability of success and still get paid a nice premium.

Are you saying sell puts at a price which doesn't look achievable, IE maybe 7500 on FTSE ?

[alocacoc]

The FTSE100 is at about 6050. I'm not familiar with the FTSE. I trade only on US indices.

In example, you could sell 5800 Puts. Those are out of the money and contains only time value, only extrinsic value, which decays day by day. As long FTSE do not fall below 5800 you would keep the premium. Breakeven would be 5800 - the amount of premium you received. Watch the delta of the short strike to determine the probability.

I'm not sure if we mean the same thing when we speak about spreads. In the example above, this would be a naked put which contains a huge maximal risk because theoretical FTSE could go to zero. It would also require a huge margin. To reduce that risk, i would buy a also put which is closer to 'at the money' on the same expiration cycle. May be at 5850. With that you have a risk defined spread. Max Loss = Spread (difference of the strikes) - premium you got. Max Win = your received premium. This is called a short put vertical spread.

In this example you want that your options will expire worthless.

On such a spread, you make money on three possible scenarios.

1. FTSE goes up.

2. FTSE goes sideways

3. FTSE falls further but not below your short strike

If you buy only a single option, FTSE MUST rise to make money because everyday the option is loosing some premium (Theta would be negative). You would fight against the time. As mentioned on my previous post, this spread would have a bullish bias / direction. Delta positive. Since you sold the strike which is more far out of the money (current price of the FTSE) you would be Vega negative. If FTSE rallies up, the implied volatility will fall and the decay off the premium will even be faster.

Actually i mostly buy options when vol is low. Then i prefer calendar spreads and diagonals. Now, it's the time to sell premium. Whatever you do, be careful, it's not easy to handle the high vol.

I hope this makes sense.

S&P futures rallies right now. Up 2.3%

Edited August 26, 2015 by alocacoc

[johnson36]

Thanks alocacoc.

There is obviously a lot to learn.

With FTSE around 6000 having come down from 7100 I thought that buying December Call options around 6500ish would be about right and their value would go up on any rise.

ill be honest I understood about 20% of what you wrote

[DogNo1]

Well, if you think that the FTSE will go up, why not do a bull call spread? You could buy a 6500 call and sell a 7000 call. The income from the sold call would decrease your loss if the FTSE doesn't rise to 6500. Your possible profit would be capped but, take it from me, options are risky, especially naked options. Unless you are fabulously wealthy, keep the number of contracts small. I lost a fortune trading naked options. Now I do a small number of contracts buying a distant call and selling nearer term calls to make my profit. For example, you could buy a Jan 2017 $10 call on F and sell a Jan 2016 $20 call. I doubt if F will make it to $20 by January. Good luck!

[johnson36]

Thanks DogNo1

I will read up about that. My current call options now are between 6500 and 7000 for Dec17th. I am just dabbling with small amounts on this now, options is new to me.

I lost £45k on Monday after been in profit of £25k about 3 months ago, You could look at that as a loss of £70k but I am happy to call it a loss of £45k as that was my own money to start with. I made a simple mistake of never taking anything out, I just kept getting more confident as time went by.I have real shares that are a large loss but I am happy to collect dividends and wait for the prices to recover over 1 or 2 years.

Its a fresh start now on IG index on a smaller scale. I actually jumped straight back on on Monday morning after loosing the £45k between 11pm Sunday and 8.30am Monday, I got caught up in that massive DOW drop and lost a bit more (£563), never mind I am still alive and my heart blood pressure monitor is actually showing perfect readings which surprises me (122 / 75)

So now I need to learn more new stuff. Hope some of you guys can help. Cheers

[DogNo1]

You're not alone. I held on to my oil and energy stocks after they had dropped 60-70% thinking that they couldn't go much lower. They did and I finally got out on Friday morning. I took profits on my big gainers on Friday morning too and I'm glad that I did. Even though my holdings have recovered a lot, I suspect that severe volatility lies ahead. For now I am holding on to my best dividend payers and riding it out. Many of my investments now are focused on preferreds and above junk level bonds as well as MLPs and REITs. They can fluctuate so long as I make my dividends and they don't drop too much in price. Commodities are getting hit badly now but India is growing and may become a significant consumer of commodities in the future. If so, the price of commodities will rise again. BTW, the website Investopedia has lots of good articles on options. Good luck!

[alocacoc]

I held on to my oil and energy stocks after they had dropped 60-70% thinking that they couldn't go much lower.

/CL today up more then 8%.

But you're right. Volatility is still high. We are in a crazy market. Trade small, take care.

[johnson36]

My real shares (not spread bet ) include all the ones that dropped the most in recent weeks. Rio , Bhp, Hsbc, gsk, ,,, but look at the rises today. Rio 4.7%, Bhp 9.2%, hsbc 4.74%, gsk 4.43%

[johnson36]

My call options are starting to look good as well

[Chivas]

I have IG index but as a Brit prefer to use Capital Spreads and ETX Capital. Made some glorious profits this last week shorting with Trailing Stop behind, on FTSE and Cac.

Best weekly profit ever since 2007

[euca]

Am just starting to learn spread betting & would be grateful for some advice.

Am a Brit Expat in Thailand. Do I need a UK address [i'd rather not, if possible] or is there another way, eg Gibraltar & would that be reliable?

I read on this Forum of CapitalSpreads & IG. Surely these are UK-based.

Are there any reliable firms here in the Far East?

I'm open to any advice, either on here or by PM.

Thanks.

Edited November 6, 2015 by euca

[fletchsmile]

Ftse came down from 7100. December 17th Call options for 7000 are at 10 on IG is it worth a go ?

Since the imp. vol. is quite high at the moment, i would rather sell premium to benefit from the time decay and falling vol if you want to bet on raising prices.

If you buy FTSE / DAX Calls you would give up a decent amount of the premium when these markets recovers. Even then when the trade going to be profitable. Due the high vol you could sell put spreads far out of the money with a high probability of success and still get paid a nice premium.

Are you saying sell puts at a price which doesn't look achievable, IE maybe 7500 on FTSE ?

Edit: Just read some more of the thread ... and realised I shouldn't have replied in the first place

Best wishes

Cheers

Fletch

Edited November 6, 2015 by fletchsmile

[luckystrike]

If you would like more info on spread betting you can find it here http://www.financial-spread-betting.com/Spread-trading-faqs.html

But beware I wouldn't recommend anyone to trade with Capital Spreads - see how unhappy their employees are (London Capital Group operates Capital Spreads): https://www.glassdoor.co.uk/Reviews/London-Capital-Group-Reviews-E546425.htm I would suggest you Ayondo instead, if anything they charge interest only on the borrowed amount.