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.