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."