Poor Old George . . .

 . . Osborne, our benighted Chancellor of the Exchequer. In his Autumn Statement last Wednesday (4th. December) he gamely tried to convince us the "the economy" (whatever that means) was coming out of recession, with growth forecasts ever rising.  A glance at the FTSE 100 shares Index suggests the wheels of industry and commerce don't believe him, because the Index is 200 points off its recent highs of only a month ago.  The reasons . . they know that recent growth is largely down to increased consumer spending (i.e. borrowing on the plastic) as the insane Christmas season cranks up again.  FTSE bosses are not investing in plant and staff, the real engines of growth.  But enough of this. What do I know?  I'm just a humble option trader.

This week I redeemed my 4 short Puts in Morrisons Supermarkets, December expiry, Puts struck at 280, Morrisons shares languishing below 260p. So, to avoid having to buy 4000 shares on a Put assignment, I bought back the contracts and sold 4 Puts at 280 (again) for the June expiry, pocketing £424 in the process, an amount that surprised me. These new contracts expire on 20th.June 2014.  Little chance that anyone will assign such long contracts at the moment.

Missing Month

Hello Readers!   I haven't been updating my option trades in the FTSE Index for a couple of months.

Briefly, my November trades resulted in a profit of only £856.00p - lower than my usual target of £1,000 plus. The FTSE was gaining ground, so  on 11th. November I closed 8 x 6700 November Calls, left the 8 x 6050 Puts to waste away and opened a spread for the December expiry by selling 8 x 6750 Calls and 8 x 6050 Puts.  The total receipts for this trade was £6,704.00p: note, receipt not profit.  Then, to bring you up to date, just this morning I bought back the above position for a total of £1,976.00p - a profit on the December contracts of £4728.00p, which made up for the below average result in November.  With the December contracts out of the way and the profit safely banked, I opened for the January 2014 contracts by selling 8 x 6750 Calls and 8 x 6050 Puts - the same as my opening position in December.  The net receipt (again, not profit) for this trade was £4,664.00p.  If you want to play why not consider joining the White Knuckle Riders (W.K.R) Investment Club, email wkr.inv.club@gmail.com.

Bhoona Lamb, Anyone?

Today the BBC News website has a story about a naughty butcher.  He has avoided being sent to jail even though he used Y-front underpants as wiping cloths in his shop.  Well, he's got to use something to wipe his slabs etc, hasn't he?  And provided the underpants were well laundered I can't see much wrong with using them for this task. Wouldn't mind betting that wiping down the meat counter is a lot more hygienic that much of what goes on in most underpants in daily use. What do you think?

It's That Man Again!

Today I woke to the news that Prince Charles is fulminating against the pensions industry.  Good to know that I have something in common with the heir to the UK throne!  His outburst is reported in the "Daily Mail", one of the organs of the British press that comes (fairly) close to being a real newspaper.  You can read the article on-line for free so I won't weary you by quoting it here.  You can also read it on-line in the "Times", which is a real newspaper - but you'll have to pay for the privilege.

I noticed one particular phrase, though.  The Prince, who will be 65 next month, says "the pensions industry is unfit for purpose"  Well now, that depends on what he thinks its purpose is!  He means, I guess, that the industry doesn't provide us (you, me, Princes etc) with adequate pensions when we reach retirement age.  The industry thinks its purpose is to screw as much money as it can out of its unsuspecting and financially ignorant customers during their working lives and to hand them much less than they were expecting when they do retire.  Fund managers have to behave this way, or how would they afford to pay themselves 7 figure salaries, buy their Porsches, yachts, second homes in France, pay to join the right golf clubs and order their pinot noir a dozen crates at a time.

Wake up folks!  The pensions industry does not exist to make money for you.  It exists to make money for itself.  Schimples.

(Like his Dad, isn't he!!?)

November Comes Early

Hello, People!  When trading options in the FTSE 100 Index I don't use guesswork, crystal balls, goat entrails, tea leaves or the stars.  I use a set of Rules.  I won't bore you by explaining and/or justifying them except to say - my Rules do not use the past to predict the future. If this were possible there would be no Stock Market and there would certainly be no such activity as "derivative trading" i.e trading options and futures. I'll leave you to work out why.  No, my Rules serve two purposes. They tell me when it's time to trade. They stop me having to think. They have been very successful and have enriched me considerably over the years.

And yesterday, October 1st, my Rules told me "Doctor, 'tis time to redeem your October position and open November."  The diligent reader will remember that I opened my October position as recently as 10th. September, so that was quick, eh? A phone call to the brokers and I, or rather he on my behalf "bought to close" 7 x 6150 October Puts and 7 x 6750 October Calls, and "sold to open" 8 x 6050 November Puts and 8 x 6700 November Calls.  Note that this trade widened the "spread" between the November Put and Call strikes by 50 points over the October spread.  The whole trade bolstered cash at the bank by £2785.00. This is not profit unless/until the November contracts expire with the FTSE 100 Index between the Put and Call levels at 10.30 a.m on 15th. November. The trade resulted in a net profit on the October options of £3577.00

One day I shall fall flat on my face and you can all larf and say "When it sounds to good to be true it probably is."

Beans, Beans are good for the heart . . .

The post below this one informs us that  the BBC thinks "poor numeracy blights the economy and ruins lives."

Consider then this cameo pricing model that I grabbed from a well-known supermarket's on-line shopping site this morning when I sent in my weekly order.

I'll leave you to figure out which is the best buy and then to decide whether buying the wrong pack will ruin the economy.  Buying the wrong pack certainly helps the store's economy; whether it will blight your life is for you to say.  You might also think about why the store describes the six-pack as "Special Value." (Note "Add" above is not an arithmetic opertor. It means "Put the item into your on-line shopping trolley.)

Oops . . . I almost forgot!  Today I redeemed my open FTSE options position by buying 7 x September 6200 Puts and 7 x September 6750 Calls.  This position was originally opened on 8th. August 2013. The FTSE 100 Index did not stray outside this 550 point range while the contracts were in place.  Here's another little numeracy conumdrum.  If I had chosen to invest all my September profit in the better of the two offers above I could have ordered 2,222 packs with a few beans left over.  THAT'S how profitable option trading can be!

Having bought back the September contracts, I "sold to open" 7 x 6150 FTSE Index October Puts and 7 x 6750 October Calls.  The net of these trades (buying September/selling October) is not guaranteed profit yet - but it has temporarily stored a lot more tins of beans in the bank.  Listen out for more . . .

Fun With Figures

Today the BBC is telling us that "Poor numeracy blights the economy and ruins lives"  That's as maybe. (See examples below) What annoys me is how articles like this refer to "maths" when they mean "arithmetic."  Arithmetic is to maths as paintbrushes are to a J.M.W.Turner sunset. Now FTSE dismounts hobbyhorse to ask . . .

. . . 3 questions.  Do they test your ability at maths, your ability at arithmetic or simply your ability to think?

1.  If I tell you the average of two numbers and one of the numbers, can you work out the second number?  (Example:  Average of two numbers is 12.  One of them is 8. What is the other number?)

2.  The National Lottery asks you to choose 6 numbers from 49. What's the chance you choose the first number  i) correctly, ii) incorrectly? And the second number . . . and so on down to your 6th. choice.

3. How many different four digit PIN numbers are there -
    i)  If duplicated digits are allowed?
    ii) If duplicated digits are not allowed?

Armageddon is Just Around the Corner

Who says so?  The magazine "Money Week" says so.  In a massively overlong and melodramatic article  "The End of Britain" the magazine explains that Britain's debt is too big, we can never repay it, change and decay in all around they see, and say goodbye to your money, your house, your pension, your investments.  But YOU can avoid personal financial devastation.  How?  Go on, guess.  You can't?  Then I'll tell you. All you need do is take out a subscription to "Money Week" and they'll tell you all you need to know.  Schimples!  On you go, sucker! It's only £175 p.a.  If their dire warnings are right we'll all go down together including the editors and column writers at MW. If wrong, well, you're £175 worse off and they're £175 better off.  If only telephone scams were that simple . . .

And a word to the MW editors and copywriters.  The article is so wearyingly and boringly long and repetitive that very, very few readers are going to get anywhere near the "Send us your money" bits at the end.  I mean, the kick-off's at 3.30 . . .

Invest For Yourself!

First, the downside.

If/when you join a workplace pension scheme your employer top-slices you salary and hands it over to the Pensions Fund whose job it is to impoverish you when you reach retirement age. Your employer adds a contribution and H.M. Government adds a bit more in the shape of tax relief on these contributions.  Short of opting out of the scheme, there's nothing you can do except pay up.

If/when you start a pension plan, money is taken from your bank by direct debit, monthly or annually.

In either case, you are contributing willy-nilly to the scheme or plan. You don't have to exert any self-discipline about actually making the payments.  You can happily forget about them, which is exactly what the pension fund managers want.  They want your money.  They don't want you to ask questions about what they're doing with it.

If you invest for yourself, YOU must make a personal commitment to put money into your investments on a regular basis. This is not easy because most people - and that includes you - can't resist looting their investments/savings for a new car, jet-skis. daughter's wedding, holiday in Marbella etc. etc. whenever the fund reaches a miserable few hundred quid.  Fatal. If you recognise yourself in the above, better after all to hand your cash to a penison fund, unit trust etc and let the manager spend it for you.  At least you'll get something back when you retire.

More tomorrow.

The Great Rip Off

Your workplace pension scheme and/or your private pension probably requires you to convert your pension-pot into an annuity (i.e. annual income paid monthly). Journalist Paul Collinson in the "Guardian" 24th. August 2013 has interesting things to say about this system for rewarding/defrauding you at the end of your working life.

You can opt out of workplace pension schemes, although not until after your employer has opted you in.  So if you're in one, get out of it - now.  The scheme might insist on keeping contributions you have already made until you retire, in which case you've just learned your first lesson about how pension schemes extract money from you.

Nor do you need a private pension. These schemes are headed up by overpaid men in red braces who probably skim 2% minimum off every one of your contributions. Pension Funds exist to make money for the Fund, not for you.  The annuity you get at retirement probably won't repay you as much as you've paid in unless you live to a very, very ripe old age.  If you die earlier than actuarial forecasts say you should, the balance of your pension pot goes to an insurance company, probably with a "thank you" payment to the pension fund that you fell for in the first place.  You should be more scared of pension funds than of internet fraud or identity theft - a lifetime spent piggybanking a proportion of your pay cheque will probably turn out to be about as rewarding as buying lottery tickets - if you're an average earner, that is. All the cards are stacked against you. If you're already massively overpaid your pension is probably gold-plated by the taxpayer or your company's shareholders. 

We don't teach folk anything useful about money and finance and how to avoid being ripped off either at school or after.  We leave them to find out for themselves at 65 what they should have found out for themselves at 25  - invest for yourself.  Do I hear cries of "Ooerr!  I can't do that!  I don't know anything about investing!"?  So already you're level with a lot of pension fund managers and Independent Financial Advisers.  

I give financial advice for nothing - and I bet that in the most cases it will be the same as an IFA gives you for about £125 and hour.

Third in shares.  Third in UK short/medium term Gilts(*). Third in Premium Bonds - which with only average luck pay more than the banks. Forget ISAs. They're another scheme for extracting commissions and management charges from you. Do everything for yourself. Don't leave it to the wide-boys.

(*) NEVER corporate bonds.  I know IFA's who were busy flogging Lehman bonds 24 hours before the firm went belly up.  

Watch this space.

Do You Ever Feel Close to Despair?/Club News

Here's another example of the sh**e that the BBC offers us as "news." Oh my friends, this one really will change your life, even if you don't know where to put your apostrophes!  (Anagram of "Stop Her Soap" - which doesn't matter one way or the other)  

I interrupt another of my lunchtime rants to remind you there are plenty of vacancies in the phenomenally successful "White Knuckle Riders Investment Club" which modestly tries to make you 1% per month (that's per month).  Details from wkr.inv.club@gmail.com. Preference will be given to punters who can express 1% per month as an annualised rate . . .

Dare We Believe It!

The BBC News this morning is telling me that the Banks - the Institutions that steal your money - are getting rid of up to half their Financial Advisers!   That can only be good news.  There's a young woman being interviewed just now who was introduced as a "highly qualified Financial Adviser"(*)  WHAT THE HELL IS THAT!   I give financial advice for nothing.  Ready?

1.  Look after your own pension. The H.Q.F.A's(*)  and Fund Managers rob you blind for doing it on your behalf.

2.  One third in Gilts. 

3.  One third in solid shares such as BP, Centrica, BT, Sainsbury, Legal and General

4.  One third in cash.

5.  Consider investing the "cash" in N.S&I Premium Bonds up to the maximum £30,000.  The Prize Fund is worth as much as or more than the interest you'll get on a bank account or cash ISA, and you might get lucky and end up a millionaire.

6.  Whatever you do DON'T give a penny to a Fund Manager or H.Q.F.A.  They don't want to make sure YOU end up with a fat pension. They want to make sure that THEY do.

Anything else you want to know   email me at wkr.inv.club@gmail.com  

OYEZ! OYEZ!

Good Morning friends, fans and followers!   Follow THIS LINK and tell me . .  is it really News?  Will it change World History? Or is it the sort of shite that our nation - drunk on drink, footie, cheap holiday flights, celeb gossip and TV quiz shows - uses to further reduce its brains to custard?

That's all for today.