Ponzi

One of my delightful daughters gave me "Ponzi" for Christmas.  This is the story of Charles Ponzi, Italian immigrant to the USA early in the 20th century, who ran probably the most audacious "pyramid" scheme of all time.  Most of Boston fell for "Deposit your dollars with Ponzi's 'Securities Exchange', and in 90 days time, he will return it with 50% (that's FIFTY percent) interest." The commodity he pretended to trade on his investors' behalf was international postal reply coupons.  His idea worked (in principle) and indeed, he checked it out using French, Italian and Spanish coupons(*) and made himself a few dollars profit before he opened the scheme to all comers.  Thereafter he forgot about trading the coupons, took in the investors money, handed them out their 45 or 90 day promissory notes and . . . well, read it for yerselves!  Available from A**z*n. Like any well thought out pyramid scheme, it hangs together as long as there's a queue of suckers outside the office eager to hand over their hard-earned life savings, which he used to pay off the lucky folk who had joined the pyramid earlier.  Or until the Boston Post got interested in this dapper, 5'4" smiling, charming Italian who seemed to produce money out of nothing. This was in the days before "If it sounds too good to be true, it IS" became the investor's watchword.  There's a picture of the little miscreant elsewhere on this blog.  Let Ponzi be a warning to all. He gave his name to  . . . "Ponzi" schemes. I'll stick to trading FTSE Index options . . .

(*)  Buy International Postal Reply Coupons in European countries using U.S dollars. Redeem the coupons in the US for US postage stamps.  In 1920, when Ponzi was operating, IPRC's could be exchanged for stamps at a favourable rate.  This was a concession, so that European immigrants in the US could write home cheaply.  In other words, Ponzi ended up with MORE stamps for his dollar than  he would have if he'd spent the dollar in the US.  The "extra" stamps were his profit.

Wonderful, Wonderful Copenhagen . . .

. . . way down this blog I modestly pointed out that some things are so predictable you can't pretend you're clever for predicting them.  So here's another.

OUTSIDE OF WEASEL WORDS the Copenhagen Climate Change Championship Conference will achieve precisely nothing beyond bland resolutions to "do something pretty damned quick about climate change and/or global warming" or whatever the latest "scare the pants off 'em is."  And before you all started nodding wisely and agreeing with this prediction . . think about this . . . how many folk do you know who are prepared to change their lifestyles (like stopping flying, giving up the Chelsea Tractor in favour of a pushbike, gagging Jeremy Clarkson and his demented Top Gear Petrolheads blah blah) in the interests of a future more than 48 hours away?

Oh and by-the-way . .  will someone please explain to me using real live numbers exactly how "hybrid" cars save CO2, emissions/energy/oil/pollution or anything else? (And PERLEEEASE don't say "Well, the charge on the battery comes from wind energy."  Wind turbines are a massively inefficient way of generating electricity, and a massive con perpetrated on the Government and the (largely) technically illiterate public by the turbine builders.  Almost any other method of generating "green" energy is better than capturing our balmy breezes.

And a further by-the-way . . . there are MUCH BETTER ways of saving energy/petrol or whatever it is you think petrol/battery hybrids do.  Better ways would use some form of regenerative transmission. Basically, these systems "brake" the vehicle by storing its kinetic energy in a potential energy reservoir.  For instance . .  couple the vehicle to an on-board flywheel which "spins up" as the vehicle slows down etc. (Question . . . spot the downsides!)  Or . .  connect the vehicle to an on-board pressure cylinder.  When the vehicle slows, its energy is stored in the hydraulic fluid.  When the lights go green, this energy is released back into the drive train.  This system can EASILY produce burning rubber levels of acceleration WITHOUT  ANY HELP FROM THE ENGINE.  Prototypes of this system were developed thirty years ago in Glasgow University Department of Mechanical Engineering. The performance of the protoype vehicle was gobsmacking! But the idea never caught on.  I suspect because of obvious vested interests, and because the engineering involved was not "exotic"  It was done with standard "off-the-shelf" hydraulic components.  How do admen glamourise a vehicle that's built out of fork-lift truck bits and bobs, and doesn't "vrrooommm" as you get away from the lights?  Car enthusiasts do not like silence.

At present, all  exisiting types of road vehicle "brake" by converting their kinetic energy {largely) into heat in  the brakepads, discs or drums.  Amazing!  You heat things up to get your SUV going!  You heat things up to stop the bloody thing . . .  and forget-ye-not . . . the car engine is a HEAT ENGINE and cannot be better than about 35% efficient (Laws of Thermodynamics), but the pad/disc/atmosphere system is a HEAT EXCHANGER and so it efficiently wastes 100% of the vehicles kinetic energy when you use the brakes.  Get on yer bikes , ,  the fuel is a lot cheaper!

December 2009 and January 2010 FTSE Index Options

I redeemed my December FTSE 100 Index options 1 week before they expired, and opened 7 x 4800 Puts and 7 x 5800 Calls in the January 2010 series.  Fans and followers who study the option prices on the LIFFE pages will see that the NET of these transactions leaves me better off than if I had waited until the December options expired worthless on Friday 18th. December.  My December profit is £211.60 LESS than it would have been - but my take for the January series is more than it would otherwise have been at the end of next week  I pocket an unassaiable PROFIT of £1076.80 for December, and a potential profit of £2074.80p in January, provided that the FTSE 100 Index lies between 4800 and 5800 at 10.30a.m on January 15th, 2010. Only one slight hitch through the whole of 2009.  IT CAN'T LAST!  Happy New Year, folks!

Splashed Out . . .

. . . on 6000 shares in ARM Holdings.  They develop and license the technology for making the chips in yer actual mobile phones.  So do me a favour, followers and fans.  Throw that clapped out old Mobe in the recycle bin and buy yerselves a new one!  Boost the Doc's ARM dividends.  I paid 166.24p per share, net of expenses.  At the same time I sold 6 Call contracts in the June 2010 180p series on the shares.  This sale netted 8.987p per share. In effect I have paid only 157.25p for the shares.  The usual caveats apply.  I would be ill advised to sell the shares before next June, even if they are showing me a stonking profit, because I could be "called" for the shares at 180p and would have to buy them in the market at a stonking loss to meet the Call! Ideally, I'd like the shares to stay below 180p till next June, by which time I will have collected a dividend . .

I used to be a postman . .

Now I'm a jumped-up postman playing at being a Home Secretary. . . .

so when Washington tells me to deliver Gary McKinnon, I deliver him, geddit?
And if you disagree with that decision . . . observe my two fingers . . .

A Week is a Long Time . . .

 . . . in the stock markets.  The Dubai scare last weekend seems to have evaporated. And the week has been very quiet after Monday's fall.  No need to rearrange any open contracts.  Centrica dividend (£183.00p) has landed in my account. 'Night all!

Dubai.

Well, now . .  property prices in Dubai - if not the properties themselves - are collapsing, and with them, the world's stock markets.  Redbraced Experts are predicting the second stage of the Great Crash of 2008-09 and all is suddenly doom and gloom again with the FTSE down in the 5100's.  So here is a warning, with apologies to Percy Bysshe Shelley . . .

DUBAI, 2009

I met a traveller from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shatter'd visage lies, whose frown
And wrinkled lip, and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamp'd on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear:
"My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away.

In the words of John K. Galbraith . . .

. . . from  "The Great Crash, 1929", (p48 in the Penguin paperback edition, available from *m*z*n)

"Wall Street . . . is like a lovely and accomplished woman who must wear black cotton stockings, heavy woolen underwear, and parade her knowledge as a cook, because, unhappily, her supreme accomplishment is as a harlot."

Sell All Your Shares . . .

. . . as soon as you read, or some redbraced financial genius says "This time it's different" or "We're in a new paradigm" or words to that effect.  It means there's a crash, or at best a significant market reversal  coming . . .

Handball

I am pleased and proud to tell my millions of devoted fans that I have never wasted a single penny watching this dirty, cheating, spitting, foul-mouthed, corrupt, unbeautiful game since I was a schoolboy. If handball has been played in those days at the level of shirt-pulling, tripping, blind side kicking, tripping and thumping that disgraces the game today, after ten minutes there would have been two netkeepers on  the pitch, the other twenty overpaid cretins would all have been taking early baths.  Nor do I waste my one precious life watching dumb goons chasing a handball round a television screen.  (Though when the first blind-side slaying happens, I might just watch the replays with considerable satisfaction.  For it will mean one dead and one in the slammer - after the penalty throw has been taken, of course.)  Football, beautiful, beautiful football is a quite different kettle of shit . .  sorry, fish.

FTSE 100 Share Index . . .

 . . . ended the week at 5258.  Centrica shares edged above 260p on Wednesday, but the rise was not sustained, so no threat to my covered calls in this stock at 280p in the March 2010 series.

Yesterday In Parliament . . .

. . . the aptly named Minister for Education sought to discomfit an Opposition oppo on the business  of GCSE exams getting easier.  Mr.Balls asked the Honorable Member for Somewhere, and quoting from actual exam papers:- 1)  To name the enzyme which brought about some particular process of digestion, 2) to explain how a flourine atom becomes a flouride ion, and 3) to work out three quarters of one and two sevenths, or something like that.

The Opposition MP did not rise to the bait, so presumably Balls thought he had proved his point.  Well, sorry Ed - but in the context of the subjects in question, all three questions are  trivial.  The first asks the candidate to regurgitate a bit of physiological fact.  A dumkopff candidate can answer it without knowing anything about enzymes, what they are, what they do, what digestion involves  . . . need I go on? The second asks for information relevant to all chemical processes (electron exchange).  That one knows nothing of chemical physics does not prove the question is difficult - in fact, once again, it is - or should be - trivially easy for a chemistry student. A few more give-away marks. What to say about the third question?  In my day children of 11 or 12 could do this sort of thing - though why we were asked to remains a mystery. These days,  many first year University students in technical subjects can't do this sort of thing.  Some of them can't "cross-multiply." Plenty of engineering students reach the Universities never having heard of "logarithms" - because they use calculators in school for division - and so are totally bemused by elementary differential equations.   The Open University admits students without asking for proof that they can read and write . . radio and TV editors no longer know the difference between "less" and "fewer", "jealous" and "envious", "may" and "might", etc. etc  . . most German truck drivers can speak English better than the Brits . . . but don't get me started.

What's the FTSE doing just now . . . ?   (Hey, Mr.Balls, what's meant by a "covered call"? You perhaps don't know the answer - but that doesn't prove the question is "difficult" - merely that the answer ain't to be found in your extensive specialist knowledge of digestive processes, chemistry or arithmetic.)

And that's another thing!  I wish end-of-life programmes like "Countdown" would stop referring to "maths" when they mean "arithmetic"  Arithmetic is to maths as paintbrushes are to Turner sunsets.

Redeemed . . .

. . . my November short 5550 Calls when the FTSE kicked off this morning up yet again. The FTSE Index stood at about 5340 when I bought back the Calls for 2.5p (i.e. £25 per contract)  Astute fans might be wondering why I redeemed these contracts when they were still 200 points "safe".  Because the buy-back costs rise rapidly as the FTSE Index gets closer to the "strike price"  Interested fans can check this out by examining the dealing prices on the Euronext pages. (Click on the LIFFE OPTIONS PRICES link above) The rises this month have been mostly on the back of the extraction and mining companies and oils.  Net cost of this repurchase was £195.80p, reducing my pocket money on November trades to £1332.60p - see head of this blog. At 4.00pm, with the FTSE at 5365 and the Dow Jones Index in New York still rising, I opened December contracts, 6 "short" in the 4800 Puts and the same number "short" in the 5800 Calls.  This sale netted £1268.40p, which will be my profit if the FTSE Index ends between 4800 and 5800 at 10.30a.m on 18th. December.  That'll buy the Christmas Nosh, innit?

It Isn't Just Me . . .

. . . today's "Guardian", Money Section, page 3, features a fund manager who has set his face firmly against equity investments for decades.He has vastly more experience than I with UK Gilts.  His article reinforces my belief, stated in earlier posts, that Gilts - not shares - should be the bedrock of your investment portfolio. He points out that shares are a good long term investment only so long as you get your timing right.  Worth a read.

Labour Have Won . . .

 . . . Glasgow North East in a by-election  caused by the resignation of Speaker Martin, scapegoated by the Establishment following the MPs' Expenses Scandal. And lo! The Labour benches in Parliament are already celebrating another Great Labour Victory in the next General Election. Don't count chickens, folks! Glasgow NE is (probably) the most underemployed, quasi-literate, welfare dependent constituency in the land.  They would vote for a collie dog, or a caulflower, or a cardboard cut-out of Mickey Mouse as long as it had a Labour ticket hung round its neck. Voting Labour is one of their Great Traditions, along with drink and football-watching.  The exciting aspects of the result are twofold. First, another drubbing handed out to the self-satisfied, self-regarding, Alex Salmond, Tartan Chief of the SNP, aptly described by one wag as "Great Pudding of the Chieftain Race"(*).  Second - the Tories only just pipped the BNP for third place. Nick Griffin always looks like he needs a clean shirt and his suit pressed, but the fact that this dismal politician can give the Tories a close run holds the prospect of exciting times ahead next Spring.

FTSE closed last evening at 5269.  Wall Street;s Dow-Jones index fell 94 points and so my potential profit of £1500 odd on the November FTSE Option contracts is beginning to look fairly safe.  Expiry next Friday, 20th. November

(*)   Misquoting one of Rabbie Burns's less dismal poems.

A Rant about A.I

A.I in the context of something-or-other stands for "artificial intelligence", and Wilkipedia (inter alia) will explain it and link you to scientific and philosophical discourses on the subject.  Well, DREAM ON! As I type this, the "Radio Times" is on the coffee table in front of me. But it is "upside down". Nevertheless I can still read the title.  As I could if the idiot printers had printed "Radio" upside down with respect to "Times" and the whole thing reading from right to left.  Or with every letter printed in a different colour and in a different typeface and with some of the letters upside down and some the right way up and and some of the letters mirror images of themselves and with the odd letter printed twice or in the wrong order and maybe with all the vowels missed out.  (Though not so easy if all the consonants were missed out.  Hmm? That's food for thought, innit?)  Can a machine reader do any of these "human" intelligence tricks? The root of the problem is simple.  The nerds, geeks and A.I Departments in our tenth-rate Techyversities begin by defining "intelligence" as a "something" which they can make a machine simulate. Like - recognising a chair as something to sit on, or walking downstairs without falling over. Then they say,  "Look at my wonderful machine.  And more imnportant, LOOK AT ME!!  Aren't we wonderful?  Aren't we intelligent?"  Well . .  er . .  no!  The techytype with his soldering iron and "Unix for Dummies" textbook may well be, but his quasi-useless machine isn't.

Here's another example of an artificially intelligent system whose I.Q is somewhat lower than a stone.  The other day, I was required to "activate" a new credit card. On keying the 0800 number (freephone to my friends across the Pond), a nicely spoken person asked me what I wanted to do.  Usually they tell you which button on the phone to press, and for a glorious moment I thought I was speaking to a real live girl. But NO!  When I said "I want to activate my new credit card", the voice-simulating machine replied "I'm sorry.  I didn't understand that.  Please try again."  Very slowly and carefully I said,  "Activate. New. Credit. Card"  This went on through several repeat loops.  (Oh . . . I'm sure I wasn't enunciating English any worse than "she" was, and I certainly speak more clearly than most of the interviewees and interviewers that you hear these days on radio and TV resolutely honking and snorting their way through one of the world's most beautiful languages. If you want to hear good English these days on the BBC or BBC World Service, listen out for the Swedish truck drivers and Chinese physicists. They speak English better than the average Estuary Native.)  But I digress.  Eventually "she" gave up and asked me for my card number.  Guess what?  Same routine. No matter how a enunciated the sixteen digits, "she" told me she didn't understand.  Finally I was asked if I would like to "speak to one of our experts"? . .  and wey-hay!! - "she" managed to understand my "Yes"  The point is, of course, that if I had been connected to a normally intelligent human in the first place and had said (something like) - "Oh, hi!  How yer doin'?  Listen, see, er, er, I got my, er, what's it, um, new credit thingy, credit card, you know, and I need to, like, hang on where's it gone, right, got it. What's the word?  Yeah. Activate it, you know, the new card thingy business."  If I had come out with that gobful of ordinary human speech, the "intelligent" human at the other end would have decoded it instantly into what I wanted to do. Artificial Intelligence? Perleeease.  Don't make us laugh!

End Of The Week . .

. . . again, with the FTSE 100 Share Index at 5142.7.  The November contracts expire on 20th.November, and my position is so far safe, and no rearrangements have been required.  The FTSE Index stood at about 5190 when I opened November index option contracts on 16th. October.  The index is going nowhere, which is just the way we "shorters" like it!

End Of Another Week

FTSE finished the week at 5044.6.   Pretty close to the mid-point of my 4550 - 5550 spread in the November series of FTSE Index option contracts.  The FTSE opened at 5133.9 on the first trading day of October.  So the Index has fallen 1.74% in the month of October.  So in the 26 Octobers of the FTSE's history, the index has risen 19 times and fallen 7.  (See previous post "Historic Octobers", and decide for yourselves whether October is an historically week month or not.)

Red Braces Think Alike . . .

FTSE 100 Index (Top)   and DOW JONES Index

 . . . on 26th. October 2009.   Wall Street (Dow Jones Index) opens at 9.30 a.m (Eastern Seaboard Time) or 1.30 p.m GMT.  I have superimposed the movements in the 2 indicices from Wall Street's opening.  Who's to say whether London tracks Wall Street or vice-versa - but note how the 2 indices move ABSOLUTELY IN LOCK STEP.  Every up or down in one is reflected in t'other index.  Note particularly the big slide on Wall Street at 11.30 EST.  I've said before that (in my view) the FTSE 100 Index has little relation to the British Economy.  These graphs suggest it has more to do with the American . . .  see why I take no notice of economic/business news . . .  (See foot of this blog for more of same . . . )

Ye FTSE Index . .

. . . ended the week at 5246, a trifle down on the week. BorING!

In Out In Out . . . of RANT mode

 . . . and of recession.  The BBC Business News at 6.15a.m today informed us that the UK economy is technically "out of recession" because output or GDP or some equally badly defined "measure" had gone up by an eye-watering 0.2% repeat nought point two percent that's two parts in a THOUSAND in the three months July to September.  Well, Hoo-Bluddi-Ray!  Does anybody really think the measure can be measured that accurately?  Well, apparently it can't because by 1.00p.m the BBC News was telling us that whatever was being measured had gone down in the last quarter.  And what did the FTSE Index make of this sudden surge or decline take your pick in British fortunes?  Well, as I blog, it's soaring about 80 points from last night's close to stand at about 5280. "Why is this?" I hear you cry. Well I'll tell you. The first reason is that Wall Street was up 1.3% yesterday, so the Red Braces of Britain MUST buy shares in case they would otherwise get left behind. The second reason is that rhe FTSE Index of 100 leading shares has absolutely no connection whatsoever to the economy.  Its surge since its low in March has been driven almost entirely by gains in the mining and oil sectors.  Which gives the lie to the nonsense you read in the "Money" sections of the Fat Sundays that "shares are the best investment over the long term"(*) - quoting what has happened to the FTSE Index since it started up in January 1984 in defence of this ridiculous shibboleth..  Shares might be just the thing for a tracker-fund manager with £billions to invest on your behalf in a fund that will last for a thouand years - though I wouldn't bet on it.  But shares aren't a good bet for me, you or the average blogger because we aren't going to live long enough, and we haven't got nearly enough NOT NEARLY ENOUGH disposable wealth to invest in a big enough numbers of shares in a big enough spread of the FTSE to track it's ups and downs.  So forget about buying yer 200 Marks and Spencer shares so that you can retire to Spain next week on the proceeds.

(*) Bonds is best!  I don't mean corporates (remember Lehmans?) or local councils (like Orange County, Calif. or the wise councillors who invested in Landsbanski)  Stick to UK Gilts.  Or if you insist on diversifying, try some more UK Gilts.  The Gilts Market is a proper market.  The Stock Market is not.  You can calculate the cash flow on your Gilts TO THE PENNY over the whole term to maturity.  You can't rely on BA or BAA or Rolls Royce to still be in business this time next week.  Remember GEC-Marconi . . remember RBS  . . . remember Enron?

In an earlier post I suggested that the B(w)ankers of Britain had won the "moral hazard" argument and knew it. The moral hazard argument says essentially, "We the b(w)anks are too big to be allowed to go under, so we can play whatever prat-games we like and lose as much money as it takes and H.M.Government via the taxpayers will ALWAYS bail us out." Well, they're at it again . . so much so that the Governor of the Bank of England is telling them off over the size of bonuses they intend to pay themselve. Listen, fans and followers, get your savings into the Nationwide before its too late. NW is still a mutual and is not governed (so far) by idiots.

It's Starting Again!

The BBC News this a.m is telling us that more and yet more B(w)anks and Bewildering Societies are once again offering applicants 5 x salary mortgages. The next step, if history is to properly repeat itself, will be to offer 5 x salary to "self certifiers." These are applicants who sign a form declaring that their income is £250,000 per annum, so they can buy a £1M pad, when they are actually living on benefits of about £8.50p per week. The applicant hopes to sell the house for £2M before the first payment falls due. The B(w)ank hopes to end up with a repossession they can sell for £8.50p before suing the applicant for the value of the loan plus interest plus costs. This of course, has nothing to do with creating "toxic assets", and if you can hear the sound of a vigourously nodding head, it's Sir Prat Goodwin looking over my shoulder.

November FTSE 100 Index Option Contracts

Opened "short" at about 3.45p.m, 6 contracts in the 4550 Puts and 5550 Calls. Total receipts for these sales was £1528.40p, mine to keep if the FTSE100 Index lies between 4550 and 5550 at 10.30a.m on Friday 20th.November. At close of business (4.30p.m GMT) the Index stood at 5190.

FTSE 100 Index . .

. . . stood at about 5248 at 10.30a.m when the October contracts expired, so I trousered the £1018.40 (see above) that I got 4 weeks ago when I sold a 4500 to 5500 spread with 6 short contracts each end. The next series (November) expire on November 20th - by which time I will have referred fans and followers back to the Merry Angus again! (and see earlier post)

David What'sHisName . . .

. . . can't understand why he has been sacked. Sorry! Been asked to resign from his job as Minister of Silly Dancing (see picture). Sorry again! Been TOLD to resign. I would have thought he was the Ideal Silly Minister. Consider his achievement. He devised a method of channelling £100K of taxpayers money (your money, my money) into his own back pocket without it looking like he actually stole it. First step is - he helps to make up the rules which allow him to do this. Then he votes to approve them. Then he whines he was only operating within the rules. (If you can hear him when his nose is so deeply buried in the Taxpayers' MoneyTrough. Makes our greedy b(w)ankers look like bumbling amateurs, innit?) Dance on, pal. And the Best of British!

Another David

OOPS! Where's he gone? CLICK the links below.

Just a hard working friendly gent, traduced by the media and generally being given a hard time. Life is soooooo unfair, innit? He has recently given up his steady job(*). For details of his misfortunes, see his "Local Guardian." Looks like yer favourite uncle, don't he?

(*) Conscientious MP for Spelthorne, devoted to the interests of his constituents . . . etc., etc. . . but as far as I know, never yet been on "Desert Island Discs"

Bloggers, Fans and Followers . . . and all who believe our banks are just TOO BIG to fail. Lloyds Bank have just tapped Mr. Darling for another £5bn of your money. Read all about it in today's "Guardian." Wonderful invective!

Here's a little riddle . . . which of these 3 do you depend on most?

Honey Bees . . . . . . . . . . . . . SUVs . . . . . . . . . . frozen seas?

Despite the DOW JONES index zooming through 10000 yesterday,

the FTSE 100 Index fell back by 9.30 a.m (GMT) to 5237.

So my OCTOBER spread (4500 to 5500 Put to Call, expiring tomorrow at 10.30 a.m)

looks pretty safe.

Lots of PC Fans out there?

My Mac G4 Powerbook developed a fault. CDs and DVDs weren't recognised and didn't always eject. Drove it to the nearest Mac "Genius Bar" (Google it, all you Dell fans) Diagnosed replacement required. I left the Mac for repair, which they would do "without labour costs, because it's only a two minute job when we get the replacement drive" (Would Acer do that?) No sooner home than the Genius Bar called. "Er . . we may have damaged a connection taking out the old drive. So we will replace the connection as well . . for free . . . and just in case we damaged the logic board when we disconnected, we will put in a new one . . also free." (Sounds familiar, HP fans?) But I would need to return to the Genius Bar to sign additional repair authorisation. Nuisance . . but . . . . while waiting for the paperwork to print out, Genius Dan gave me lots of broadband and other tips. (Presumably PC users have access to similar dedicated young folk falling over themselves to help sort out problems?) And the displays of OSX, iPhone and iPod tips on king-size screens behind the Genius Bar are worth a visit in themselves. By the time paperwork was ready, so was the Mac! (I think they didn't want me to drive home for the second time without it.) One minor gripe. Some Google hits will tell you that Apple's Genius Bars open at 9a.m. They don't. It's 10a.m. One other gripe. When will Apple open a Genius Bar in Leeds? There's one slated for Newcastle-on-Tyne towards the end of the year . . even further than my nearest. The Big Downside to all this, of course, is the usual one. If you're a Mac fan there's only one MacMaker to choose from. No competition between manufacturers means you must be prepared to dig deep for your Mac, compared to Dells, Acers etc.

The Technological Fix strikes again . . .

You will all know by now that NASA recently whacked 2 space vehicles into a crater near the Moon's south pole, hoping that the resulting 6 mile plume of debris would hold evidence of water. Apparently the Moon's south pole is one of the many places in the Solar System where the Sun never shines. Next day . . a BBC announcer or anchor-person or similar technological illiterate announced "That will be good news. It means that the next time astronauts visit the moon, they won't need to take any water with them." As if "visiting the Moon" was a bit like visiting Bognor Regis for the day with your supplies in a hamper in the car boot (trunk) . . . and way-hey! . . . finding a MacDonalds open when you get there! Trouble is . . . there seems to have been very little plume. So on Saturday (10th. October 2009), the "Guardian" reported "One theory is that the impact site was unexpectedly hard." With bated breath, trembling hands and pounding heart, I read on. Was the newspaper article about to suggest that "maybe the water was frozen"? (From time to time I will post more examples of technological barbarians uttering statements from craters where the Sun never shines.)

FTSE 100 Index . .

. . . ended the week at 5162, up 173 points on the week. October options expire at 10.30a.m next Friday. No action needed.

Any Posties Reading This . . .

. . . remember . . . when you go on strike:-

1. NO MORE JUNK MAIL FOR WHILE, T.G!

2. I won't get my Christmas Cards, nor will I send any.

3. You won't get paid, with serious implications for Christmas Stockings etc

4. Your union officials will explain to you that they're not on strike, and in fact

are working harder than usual in defence of your jobs, pay etc and so . . .

5. They will continue to receive their emoluments . .

6. Lots of businesses that rely on sending and receiving mail will find other ways of doing business that don't so rely, and won't be there for you when strike is settled . . . but the best (or worst) is . . . OOPS!

7. Royal Mail could well be one of them!

8. There's always winners and losers, innit?

FTSE Index opened this morning at 5147, a few points down on last nights close, and I look like being one of the winners when the October options expire next Friday.

A lot of 1 through 8 above is ironic, of course. My postman is very friendly and helpful, and I often wonder how he feels, lugging a great sack of processed trees that he knows will be going straight into the bin . . .

"Remember Me . . . ?"

"That's right! Sir Fred "Slasher" Goodwin, former CEO of the RBS. Today's "Guardian" (Money section) reports that I have been referred to as "World's Worst Banker" Not fair to so traduce me - just because I destroyed a business which, in terms of its total assets, was the Biggest in the World!

I'm actually the "Man Who Really Put the 'W' into Banking" And don't you little creeps still working for the RBS ever forget it - or you'll find your pensions get slashed. If they haven't been already. Or you'll lose your jobs. If you haven't already. I know where you all live!"

FTSE 100 Index . .

. . . closed the week at 4988.7, nicely in the middle of my Put to Call spread in the October series - 4500 to 5500, with 6 contracts of each. The contracts have two weeks to run to expiry on 16th. October (Expiry is always the 3rd Friday in the month at 10.30 a.m.). Potential profit is £1018.00

Broadband

Life is full of coincidences! Only one day after hearing on the BBC about the appointment of the UK's first "digital inclusion champion", we hear that "Great" Britain ranks 25th of out 66 countries surveyed for the quality of their broadband infrastructure. South Korea came top. Oh well . . . . at least lumbering, unreliable UK is in the top half.

Historic Octobers

A RedBraced expert recently told us that "October . . is historically a weak month for equities." Worth checking, I thought. So I checked. The results are shown above. . My basis of calculation is - % change in the FTSE 100 between market close on the last trading day of September to market close on the last day of October in each year shown. We see that in this "historically weak month", the FTSE 100 Index has risen 19 times in 25, and has fallen in the other 6. The average change over all the Octobers since the FTSE 100 index was originated (January 1984) is only +0.29%. The maximum October gain was in 2002, when the FTSE 100 rose 8.55%. The biggest October fall was in 1987, when the FTSE 100 fell 26.1%. Now - this doesn't prove that RedBraces Angus talks through his hat, because we haven't compared this result with FTSE 100 performances in Januaries, Februaries . . . etc. And this analysis doesn't compare the FTSE 100 October performances with other indices, for example, the FTSE 250 Index or the FT All Share Index. Nor do we know what Angus would consider a "strong" performance. So in his own terms, he may well be right. But in my view the important thing to remember is . . . in randomly changing systems such as the FTSE 100 Index, the past is no guide to what will happen next, and your guess of where the Index will be at end October 2009 is just as good as the RedBraced oracles' . . . . or mine! Remember - if a consensus of experts COULD predict market movements reliably and accurately . . . there wouldn't be a market.

And While We're On The Subject . . .

. . . of Global Warming, Climate Change, Saving the Planet and all that . . . I'll swap my incandescent bulbs for those depressing yellow-green (or 6500degK brilliant white) low energy monstrosities when H.M Government TURNS OFF THE FLOODLIGHTING on the Palace of Westminster and instructs local councils to do the same on its Town and City Halls. Until that happy day, it's another case of "do as we say, not as we do." FTSE 100 Share Index closed last night at 5159 and Apple have borrowed my trusty old G4 Powerbook OSX v4.1 Tiger to bung in a new CD drive.

Public Spending Cuts . . .

. . . we are told - by all 3 political parties - will be necessary. This is because H.M Government has given so much of our money to our busted banks and to Sir Fred Goodwin. (because he needs more yachts, Lear jets and holiday homes.) Well and good! We are all enthusiastic socialists, and so must be prepared to tighten our belts so that the reckless rich can be made even richer. But how do we - or rather you, dear FellowBloggers - reconcile Public Spending Cuts with the appointment of Martha Lane Fox to the post of "Digital Inclusion Champion" (BBC Business News, 29th.September 2009, interview with Robert Peston.) I intend no criticism of Ms.Lane Fox. Far from it. She could probably combine the roles of First Lord of the Treasury and Chancellor of the Exchequer better than the present ambiguous and dithery incumbents of those high offices. (But it would be nice to know her "job description" and how much impoverished Public Spending is paying her to execute it.) If Ofcom can't tell BT and the ISPs to get their fingers out and lay down twentyfirst century broadband infrastructure, what can Martha do? The same interview brought tidings that the French Government has declared that internet connection is a "human right" equivalent to electricity and water. Gordie Brown was twittering along these lines not so long ago. Well, if that's what EU leading lights think, let them try the following experiment. Do without broadband for a fortnight. Then try doing without water for a fortnight. Then try thinking for a fortnight before you open your mouths.

More RedBracesSpeak . . .

. . . from the "Guardian", Saturday 26th. September. Here's a typical pronouncement from One Who Clearly Knows, to whit, Angus Campbell, Head of Sales at Capital Spreads. (Spread Betting.)

"It was a poor week for the markets, and the lack of any revival or concerted effort to recoup the losses so far doesn't bode well as we approach October which is historically a weak month for equities." Decode that. Check it against the facts. Like . . October 1987 was "weak" and so was October 2008. But what about all the Octobers in between . . . and now Angus has pronounced, do we better know where to strike our October FTSE Index contracts? If he means "last week", the FTSE fell 90 points. 90 points in a whole week! A fall of a gigantic, never-to-be-recovered whole 1.73%! Oh My Gawd! Give us a show, Angus - jump from a high window to celebrate the End of the Financial World. The Business Press and News is loaded with Anguses, whose guesses are no better than yours or mine. Opened short 6 x 5500 October Calls and 6 x 4500 Puts, expiring on 16th. October, receipts for these opening sales - £1018.40. FTSE just now at 5100.8

Yeah . . right . . . whatever

Today's 'Daily Mail' tells me that ". . . Alistair Darling is to haul in bank chiefs and demand that they do not pay lavish bonuses ahead of legislation to crack down on 'recklessness and greed' in the City . . . " Methinks he's lost that one before he starts . . . . Non-U.K nationals may care to know that Alistair Darling is Chancellor of the Exchequer, and there are no strings on him . . . except the ones pulled by the Lads Who Put the 'W' into Banking . . . the IMF . . . the World Bank . . . the PSBR . . . the European Parliament . . . the European Commissioners . . . and probably Mrs.Trellis of North Wales . . .

September FTSE 100 Index Contracts

Opened (short) with 6 x 4300 Puts and 6 x 5200 Calls on 21st. August. Raised the Puts strike to 4675 on 8th. September, and closed out the Calls on 10th. September as the FTSE rally through the 5000 level continued. Net profit on the September FTSE contracts - £881.00.

Centrica plc Contracts

My main concern during the September series (expiry 17th. September) was with my covered Call options on 5000 Centrica plc struck at 260.0p. I opened these Calls when the stock stood at 246.5p in March 2009. During the contracts I received the half year dividend (£436.50), paid in June. Towards the end of the contract the stock rose from a low of 217p to 268p a few days before the contract expired. I was in some danger, therefore, of being assigned. I would have had to sell the shares for 260p. Well . . . counting the div and the opening receipt for the Call options, that would have made a nice profit. But with the next ex-div date coming up on 23rd. September, I closed out the 260 September Calls and sold 5 x March 2010 280 Calls. The net receipt for this transaction was £187.00. Counting in option receipts, and including all expenses, the shares have cost me net 226.36p. Centrica stock at the moment is 257.4p mid. I have qualified for the next dividend payment, but it would be unwise to sell the shares. Fans and Followers will by now be able to say why!

August FTSE Contracts

Twenty (repeat 20!) trades in the August series FTSE Index options, opening (short) with 6 x 4750 Calls and 6 x 3800 Puts, yielding £988.40. One of the dangers in this game is - after a longish series of successes (see top of this blog) Little Option Traders start getting too clever by half. They imagine they can second guess the way the FTSE is going to move. And they are right - exactly half the time, which is what you'd expect from something as random and as disconnected from economic reality as the FTSE Index is most of the time. Sufficient to say that after chasing the bluddi Index here there and everywhere, and, let me add, QUITE UNNECESSARILY, I ended up in profit on the FTSE trades to the tune of a magnificent £109. So, Fans . . . don't play around with perfectly safe positions - despite my antics during the month, the FTSE ended the August contracts (on 21st August) slightly above my opening 4750 Calls and a single buy-back on the penultimate Thursday was all that was needed . . . . Hmmmm. Lesson to be learned. This game ain't investing, it's BETTING. And as long as your bet ain't broke . . . don't fix it!

I'VE BEEN IN THE BACKWOODS . . .

. . . but now I'm back. I will post what happened in August and September tomorrow. Oh, yes! Some of you might be wondering . . what happened to his Centrica covered Call options, expiring on September 18th? Well . . . I sidestepped the assignment. Will post "What Doctor FTSE did next" tomorrow.

FTSE 100 Index . .

. . . stood at 4387 at 10.30a.m. today when the July FTSE contracts expired. So I banked £1088.40 from my opening sale of 3650 Puts and 4700 Calls, and opened "short" with 6 contracts for 3800 Puts and 4750 Calls for the August expiry on 21st. August. I realised £988.40 for these contracts, and this is my potential profit.

Funny Bonds.

Non-British followers and fans may not be familiar with UK "Premium Bonds." These "bonds", first marketed in the 1950s, can be bought by individuals (but not by institutions, trusts etc). in multiples of £10. The bonds are undated. Each bond is individually numbered, each number representing a £1 bond. Every number goes into a monthly draw - exactly like a lottery - except that non-winners do not lose their £1, the number goes forward to the next monthly draw. Top prize is £1M. So each and every month, HM Treasury makes some lucky geezer a millionaire and tens of thousands of the rest of us win prizes down to £25 - yours truly won 2 of these tiny prizes in the July draw, (and see previous posting). Prizes are free of all UK tax, which is supposed to make them attractive to high band tax payers. For further details of the scheme see National Savings website. So what's "funny" about these "bonds" First, from the Governments point of view, they are FANTASTICALLY CHEAP LOANS. At the moment the prize fund represents an interest rate of about 1%.- but HM Govt doesn't want to sell them to us except in penny numbers! The maximum holding is a pathetic, lamentable, derisory £30,000! It's not difficult just now to get 3% on a medium dated gilt, so bond fans with serious money simply laugh at Premium Bonds. Secondly, individual investors with money problems are not likely to buy into the chance of winning a piffling 25 quid - by far the most likely prize. Result - small investors flutter on them by buying £100 from time to time, and investors with the maximum holding grind their teeth and complain they can't buy any more. If the maximum holding were to be increased to (say) £500,000 serious investors might well take a serious interest, the number of £1M prizes could be increased to (say) 10 per month, making the scheme more attractive, at least to folk who don't understand probability . . cash would pour into the scheme and the National Debt could be cleared in a month or two. A minor irritation is that bond holders cannot nominate a bank account for their prizes to be paid into. Can you believe that! This is 2009 for Goodness sake! So HM Govt. spends millions every month sending out drafts for £25 through the post, which we all have to haul round to our banks with . . . etc, etc, grumble grumble goodbye.

FTSE 100 Index . .

. . . closed on 10th. July at 4127. The July contract since June 19th has been singularly unexciting. July expires next Friday, 17th July and I expect to pocket the whole of the sale receipt - £1108.40 - that I got when I opened the contracts. Meanwhile, UK Gilts and Centrica stock sank again during the week - relieved only by receipt of Centrica dividend.

The FTSE 100 Index . . .

. . . ended the week at 4238. So no need to juggle my 3650 - 4700 Put to Call spread at the moment. 4th.July falls on a Saturday this year, so Wall Street was closed today (Friday) while brave young Americans disposed of a spacecraft the size of the State of Maine which was hovering dangerously. Consequently, there was no-one on Wall Street telling the London market what to do so the London market did nothing. Centrica shares have taken a bashing this week. Who knows why? Russia threatening to turn off Europe's gas next winter? Heat wave in U.K so folk are turning down their C.H systems? Red Braces selling Centrica because other Red Braces are selling Centrica? I could take profits on the Calls (260p, September) and sell (say) December 240p Calls. That would reduce the net price I have paid for the shares to something like the 221.5p where they languish tonight. I will look at the arithmetic of the swap on Monday. See ya!

About "About Me"

Laser measurements show quite conclusively that the average distance of the moon from the Earth increases by about 37mm per year. So it's now about 1.5 metres further away than it was when Cap'n Armstrong gave it a kick. "That's not much", I hear you cry. Or "So What?" Or perhaps even "Why?" The Principle of Conservation of Angular Momentum, folks! You got to see the Earth/Moon as a single spinning system. Tidal friction slows the Earth's rotation. So moon edges away a bit to increase its orbital radius and so conserve etc etc. The eventual consequences are REALLY HORRIBLE. But the FTSE Index requires my attention, so go find why the consequences are horrible for yerselves . . .

FTSE 100 Index . .

. . . ended the week at 4241 . . . not far off the mid-point of my 3650 to 4700 Put to Call spread. So we can all sleep easy in our beds. Followers and fans should know that the FTSE 100 Index is "weighted." So the biggest cap. companies dominate. These leaders used to be the banks and telecoms. We know what happened to the banks, don't we Fred Goodwin? And increased competition and market saturation are limiting the upside for Vodafone, BT, etc. The FTSE 100 Index is at present dominated by Big Pharma and the extraction companies. I seem to remember reading recently that the 7 biggest FTSE 100 companies account for 42% of the index's total capitalisation. Which means that price movements in these plc's determine what happens to the FTSE Index. (And movements on Wall Street, of course. What NY does, London will usually do a few minutes later. Though why London faithfully tracks a crackpot Index like the Dow defeats me. Only 30 shares in it, innit?!) See you next week.

By The Way. . .

. . . I don't use xL to keep my accounts. I use a DTP suite which includes a spread-sheeting application that can do things that Bill Gates's Little Helpers haven't even thought of. Post comment if you want to know more.

June FTSE Index Contracts

The "short" spread between 5 x 3800 Put contracts and 5 x 4800 Calls will expire in my favour at 10.30 a.m. today, netting me £2062.00, (see top of this blog) which I boggled at until I checked the contract notes. For July, I have sold short contracts, 6 x 3650 Puts and 6 x 4700 Calls, with the FTSE 100 Share Index presently hovering around 4340. These contracts expire on July 17th. Potential profit £1108.40.

Told You So . . .

Some things are so predictable that you can't claim you're clever because you predicted them! Here is an extract from Robert Peston's blog on the BBC Business pages today. He's talking about regulation of our financial institutions following . . . er . . recent dramatic financial events.

"What's striking is that both the British Treasury and the White House are not contemplating the kind of structural reforms of the banking industry that the US adopted towards the end of the Great Depression. There will, for example, be no formal prohibition on what the banks, insured by all of us as taxpayers, can do. Those big banks that are so big and important to the economy that they won't be allowed to collapse - well, those banks will still be permitted to engage in what the Governor of the Bank of England (no less) has described as "casino" banking in the wholesale markets."

Now see my ominous rumblings.

And what about the FTSE Index? Tell us about the FTSE Index! It stands just now at 4306 - almost smack in the middle of my 1000 point Put to Call spread - and looking highly likely that I shall trouser the £2062 I got for "short" selling the contracts a month ago.

Rule Britannia!

The Government has announced the conditions under which the enquiry into the Iraq war will be held.

1. It will be behind closed doors.

2. There will be a published report, but no one will be blamed for anything.

3. No one will be required or sub-poenaed to appear (which must have Mr.T.Blair sighing with relief.)

4. Evidence will not be given on oath.

So that's alright then. Pass the whitewash.

Later - June 19th. Conditions under which the enquiry will be held were relaxed following protests about lack of transparency. It will be in public except where, in the judgement of the Chairman, disclosure of evidence endangers witnesses.

How They Confuse Us

Anyone out there knows EXACTLY what is meant by:-

1.  "Like-for-like sales"

2.  One third of the World's wealth was wiped out by recent

     market turmoil/bank failures . . etc.

3.  Inflation rate(s)

4.  A.E.R%

5.  Gilts" "Coupon" Rates

6.  ex-Dividend dates

7.  G.D.P

. . . and if you do know the answers . . . where did you learn them?

Ominous Rumblings . . .

. . . heard on BBC Business News during the week!

American Banks are all set to pass their so called "stress tests". Basically, "How are your balance sheets looking now, boys, after the massive Bush/Obama injections of taxpayers money?"

"Why", the Visiting Expert asked, "will they all pass?" Because the banks, via their lobbyists on Capitol Hill, will tell Congresspersons and Senators "Make sure you set us tests we CAN pass, or you can kiss your funding of the next round of election campaigns goodbye!"

The Banks, Investment Banks, Insurance Companies etc, have won the "moral hazard" game for all time, and they know it. (Sorry about Lehmans, but somebody had to be made an example of.) They know they will be bailed out next time and the time after that, even though "it will be different next time" They now know - if they didn't know before the Crunch - that they are more powerful than Governments, than the IMF, than the World Bank, and the only "new" business model they will agree to is a rehashing of the one that unleashed mayhem last autumn. Hold on to your hats, folks. Last time it was subprime mortgages, CDO's and CDF's. Next time it "will be different" How? They'll give 'em different names.

Funny Thing . . .

. . . surfing through bloggers' profiles I find approximately 52,000 of you declare that one of your interests is "money". I can't claim to have checked out ALL 52,000 blogs - but I have so far found only one repeat ONE blog that even mentions the stuff! (And a few that tell how much the bloggers paid for their latest bits of bling.) Now check out my posting of April 10th. 2009

FTSE 100 Index . .

. . . closed this week at 4441.9   The millions of fans who follow this blog will be well aware of the implications for my 3800 - 4800 Put to Call spread.  June FTSE option contracts expire next Friday, 19th. June.  Market volatility much reduced since May.  July prices likely to be pretty low.

What you guys all waitin' for?

No one has taken me up on my ability to predict where the FTSE 100 share index will be at close of business on any day you care to name in (say) the next ten years!

C'mon . . . SOMEBODY challenge me . . .

FTSE 100 Index . .

. . . finished the week at 4439.  So my "short" spread of 3800 Puts and 4800 Calls remains safe.  Sometimes this game is plain boring . . .

FTSE 100 Share Index . . .

. . . finished the week at 4417, well within my "spread" between 3800 Puts and 4800 Calls. So far, so good. (You can view movements in the FTSE 100 Share Index over various time intervals)

Isn't it amazing!?

Disgraced Labour M.P's, shamed by the expenses exposures, now go bleating to Gordie Brown.

"Please, Gordon.  Make us Life Peers, 'cos we're going to be booted out by Cameron's mob at the next election."  Then, having pocketed their severance pay, gold-plated pensions and whatnot, they will be able to claim per diem expenses as of right, and in all probability, will be able to rip off  the taxpayers of GB for even more than they did as MPs - with no chance of being booted out short of committing criminal offences.  As if they haven't already.

What we need . . .

. . . is a completely new political party to replace the corrupt, lads-on-the-take parties we have at the moment.  How about the "Hang The Expense Fraudsters Party."  Or, for those who don't hold with the Death Penalty for robbing taxpayers blind, the more moderate "Spare No Expense Fraudsters Party".

Just in passing . . . would you bet that any of the M.Ps who have committed criminal offences to line their pockets at your expense, will end up in prison?  Or even be charged?  No way!  Nigeria-On-Thames operates on the principle - "One law for us self-regrading, self-serving hypocrites in the House of Common Criminals,  another for the berks who pay our salary-plus-expenses-plus gold plated pensions-packages".

May FTSE Options. Part 3

I repurchased my short positions in May FTSE option contracts yesterday when the index stood at about 4410 and heading rapidly south, pressuring my 5 contracts in 4375 Puts. This turned out to be a good decision, because the Index ended the day at 4331 and is heading down again this morning. At the same time I sold contracts in the 4800 Calls and 3800 Puts for June, expiring on 19th. June. Overall, these trades banked £1566, but this ain't profit unless the Index lies between 3800 and 4800 at 10.30 a.m on 19th.June.

Manure

David Heathcote-Amory, the "Telegraph" tells me, bought 550 sacks of manure. (The orifices it came out of are not specified - who's your MP?) at a cost of £385, or 70p per sack, which is fine. If manure in huge quantities turns him on, who am I etc . . .

He passed them to his gardener, which is also fine. He passed the bill to you and me, which isn't, as even the biggest twerp in the House ought to know. (I'm not getting at him paticularly. I'm sure there are bigger twerps than D.HhyphenA in the House, and who knows, some of them may have much more productive orifices.) He joins his many friends and colleagues on both sides of the House, who, we now see, have no hesitation whatsoever if spreading their horticultural requirements all over us. The BBC News keeps banging on about what we the public think of our MPs. Wonder what these well-heeled elected geezers think of US as they burn our money to grow bigger marrows?

Oops! Almost forget . . . the FTSE 100 Index presently at 4440.

The Rats Leave the Sinking Ship.

This morning's "Guardian" tells me that "hundreds of highly regarded RBS staff are leaving because of "government interference and bonuses". CEO Hunter does not explain what is meant by "highly regarded", or by whom. Possibly they belong to the right golf clubs? Where will these professional gamblers with your money and mine turn up next? Will anybody want them? But it's an ill wind . . etc . . etc. Perhaps the spaces they leave will be filled by newcomers with some useful knowledge of old-fashioned banking and a modicum of prudence.

FTSE 4454 . .

. . at 11.00 a.m. America and London seem to have discounted the noises coming out of the European Central Bank yesterday. The FTSE Index recovered quickly as soon as the London market opened . . . so for the moment my narrow spread is safe. May contracts expire this time next week.

A Busy Day . . .

. . . yesterday! I mowed the lawns! I sold 1750 Ashtead shares bought on 22/04/2009. This very short term hold yielded a profit - small in cash terms - of 259% when expressed as an AER%. Would I have been making this percentage rate if I had held the shares for a year? Better a bird in the hand. I put the sale proceeds into BT. The company will reduce it's dividend - some analysts said it would pass its dividend. Div. should be about 7% on the 97.5p I paid for the shares. I countered the run-up in the FTSE by splitting my 5 short contracts in 4500 Calls (May) into 5 x 4550 May Calls and 5 x May 4375 Puts - with the FTSE at 4520. Then I went to haircut the lawns. When this was done I returned to the laptop to find some expert in the European Central Bank had been raving about rolling the printing presses to create enough funny money to save the world. (Hasn't Gordie Brown already done that?) London responded by selling the FTSE down to 4380 putting my 2 hour old Puts under pressure. It's a funny old game, this Option Trading. Total take for May FTSE contracts now £1118.00 - but that now looks far from safe! Watch this space.

The Last Few Days

See next post down!  FTSE going up because it's going up!  The guy at the next screen is buying shares in any plc that's going up, so I better buy some as well!

Option on U.K.Gilts . . .

. . . there aren't any! This is because bond markets are proper markets whereas equity markets are not. So the bond prices do not gyrate the way equity prices do. Bond prices move with interest rates and anticipated changes in the inflation rate (and approach to maturity) and to some extent with equities. Equity prices move with the weather, the vapourings of experts, the snapping of red braces and with the Masters of the Universe (including your pension fund managers) buying and selling them by the millions and tens of millions so that the bets they have made on their "futures" positions come out right. Equities go up because they are going up because traders can see lots of buy trades going across their screens, and go down because etc. . etc. Fear and greed rule the trade in equities so price fluctuations are sufficient to create a worthwhile market in derivatives (options). Many traders also use options to hedge their futures. Futures expire quarterly in June, September etc. Consult the Euronext pages to see the huge "open interest" options in these months.

Bank Holiday . . .

. . . so while the stock market and the options market are  on holiday, let's think about what the bankers will do next. Easy! They will dream up new names for crazy schemes.  So -  "Collateralised Debt Obligations" and "Credit Default Swaps" will re-emerge wearing new hats.  And the game of lending money that doesn't really exist to borrowers who have no expectation of repaying it will start again.  In the process, a few people will get very rich.  They are called "bankers."  Some of them will be the same people who from "Big Bang" to 2007/08 put the "W" into "banking".  In due course the rest of us will be asked by H.M.Govt via Revenue and Customs to bail them out. Again.  From the sidelines, Keynsians and Will Hutton will cry "More regulation!" whilst Thatcherites will cry "Less regulation!" or even "No regulation!" And where will base rate be in 12 months time?  Don't ask me - ask the academic economists. Between them they will have at least a dozen answers because it's a well known fact that economics - with or without regulation - is a very, very exact science that invariably predicts what will happen to base rates, inflation, GDPs and so on very, very precisely

Random Questions . .

Blogger gives you "random questions."  Here's another -

Name  3 "professions" whose help you do not need provided that you can read.

The Good News is . . .

. . . that we are now in a Bull Market! An expert on the BBC "Today" programme today said so. Makes one wonder whether there is a definition of a Bull Market. There is a definition of "recession" but where it came from and who dreamed it up is probably not worth finding out. Soon the FTSE will reach "a permanently high plateau" . . an American Expert said this of the New York Index in 1929, shortly before the Wall Street Crash . . .

Pig Flu!

The Media are falling over themselves to get another health scare going. Remember BSE and it's handmaiden new-variant something-or-other that was going to kill beef eaters by the thousand and the tens of thousands? Remember salmonella, SARS, and avian flu - and tremble! But help is at hand! The one 0'clock BBC news today tells me that H.M.Govt. is sending me a leaflet about pig flu. This can be used to swat the viruses away. Or if you collect enough of them, you can bung up the cracks in your doors and windows to stop the little blighters getting in. Pass the time till some new pandemic turns up by reading "Scared to Death" (Ed Christopher Booker and Richard North, available from Amazon) . . . and remember, you gotta be scared of something! That's how they keep you in line. Now wash your hands.

May FTSE Options. Part 2

It may be only a "bear rally", but with the FTSE up 58 points by 9.00 a.m., I redeemed my 5 "short" contracts in May 4400 Calls and recouped the cost by selling "short" 5 contracts in the May 4500 Calls and 5 May 3950 Puts. This leaves me in the middle of a 550 point spread with 10 trading days to expiry on 15th. May. Net receipts for May contracts now £849. Watch this space.

Bought . . .

. . . a tranche of Taylor Wimpey shares yesterday. New houses will get built in the fullness of time, I guess.  And the banks and B.Socs will use money they've nicked from us taxpayers to lend to other taxpayers who can't afford the repayments and the game will start again.  But it will be different next time, won't it, because the Men in Red Braces will tell us so . . . don't forget, folks, there can't be bust without boom or even vice-versa . . .

And here's an interesting thought.   Mr Brown wants to resolve the question of M.P.s' expenses by paying them a per diem rate JUST FOR TURNING UP AT THEIR PLACE OF WORK. This daily hand-out of taxpayers money is to be more than most of us taxpayers get for doing our day's work!!!  And 650 snouts-in-the-trough Members wonder why we don't respect them any more . . . . even though they are very very important and clever people that this bankrupted country cannot possibly do without.

Centrica plc . . .

. . went ex-dividend this a.m. The share price dropped by (more or less) the value of the dividend. Refer to my posting of 16th. March. The share price remains below the strike price of my "short" September 260 Calls options on the stock. So I was not assigned for the dividend. I keep the stock and will be paid the dividend in due course. What happens next? If the stock price climbs above 260p before the options expire in September, I could be assigned at any time and will certainly be assigned on expiry day - i.e. I must sell the stock to the counterparty at 260p per share regardless of the market price. If the stock price remains below 260p through to the September expiry, I will keep the shares, pocket the loot paid to me when I sold the Call options and look to selling a further round of Call options for December (or March 2010) expiry, at a strike price to be determined by the current price of the Centrica shares. Look at it another way. Every time I sell Call options on the stock without subsequently being assigned I effectively reduce the price I paid for the stock when I bought it . . .

The Alphabet Recession . .

. . . featured on Radio 4 Business News this a.m. (22/04/09) Three experts held forth. No.1 thought the recession would be "V" shaped. Sharp drop, sharp rise towards end of this year. No.2 disagreed. It will be "W" shaped. Drop, bullish blip for a bit, down again then up,up and away! No.3, the ultra-pessimist argued for an "L" shape. Down into recession so deep that government borrowing would exceed GDP and eventually the interest payments on that borrowing would exceed GDP, and we'll all be murdered in our financial beds! I think we can average the vapourings of these 3 redbracers and conclude that the economy is probably well and truly pear shaped.

Unloaded . . .

. . . my tiny holding of W.S.Atkins plc yesterday, adding about £240 to the Save-The-Richard fund.

Every little helps, or as most under-40 year olds say these days, "Ev'ry li'ul 'elps" And I'm not excluding radio and t.v. announcers . . .

May FTSE Options

I guess my "short" FTSE 4350 April Calls (5 contracts) will expire worthless (i.e. in my favour) tomorrow morning, 17th. April, and I will trouser the £806 I got when I sold them.   So today I opened "short" on 5 contracts in the FTSE 4400 May Calls, at £160 per contract, £756 net of expenses.  These contracts expire on 15th. May.

Market movements are as unpredictable as usual.  One expert on BBC Business News this a.m. was talking the market down to 2750 or maybe it was 2350. Others can see the green shoots of recovery. The City rings to the twanging of red braces. The Masters of the Universe are straining at the leash. The next bull market is just over the next hill and I can predict where the FTSE Index of 100 leading shares will  close on any business day you care to name in the next 10 years . . . .

My Friendly Neighbourhood stockbroker asks . . .

. . . "Why is it that nearly everybody is obsessed with money, but hardly anyone is interested in it?"

April First, so watch out . . .

One commonly hears experts, i.e. men in red braces, say "The market always looks two years ahead" If this is true, why did not the equities market fall to its present level in the autumn of 2006, two years before the credit crunch hit stock prices . . .

. . . and remember as you peruse the money/investment sections of the Fat Sundays, the expert's most useful weasel-word is "could" - as in "The price of BoilerRoon plc could double in the next twelve months . . . " They always miss out the next bit which (roughly) states " . . or you could lose your shirt, pension pot and des.res."