The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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:-)
@youngba: I didn't think you were :)
Giles - I was explaining it, not recommending it!
Well said Giles.
@youngba: Indeed this is what I presume is going on with the 1million, 700k and 500k trades.
This method of trading does enable you to effectively leverage your position BUT this means that you are:
1/. Gambling with money you don't have.
2/. Works fine as long as the SP has risen by the end of every 4 weeks.
3/. If the SP is flat you lose the 1% spread plus the 0.5% stamp duty.
4/. If the SP drops - you're f**ked.
If you had traded like this for the whole of 2020 you'd have lost a lot of money as the SP was pretty much flat for the whole year.
Treat with extreme caution.
Monday morning looking good
Fascinating.Many thanks.
The amount of rollovers we've seen in the last few weeks suggests that they are more than happy to stay in the company then?
I can’t say for sure what Giles was referring to, but I suspect it was the same, or very similar, to my reference to rolling over a T20.
T20 is a trade where you buy a number of shares, but are not obliged to ‘settle’, or pay for those shares until twenty trading days later - ie four weeks later in most circumstances. Not every broker will allow you to buy on these terms. For those that do, the most common formula is that they will allow you to buy more shares on, say, a T20 up to the value of settled shares (not necessarily of the same stock) that you already hold with them. So, if you already hold 10,000 settled shares in ALGW you would be able to ‘buy’ another 10,000, effectively on credit, and not have to pay until four weeks later. So, if the shares are £1 each, and you have only £10,000 in cash, you have, effectively, invested £20,000 into that company - ie you’ve leveraged your investment cash by a factor of two.
Let’s say the SP doubles during the four weeks. At the end of the four weeks you sell/settle all 20,000 shares (but of course you don’t have to sell the 10,000 you already owned if you don’t want to) for £40,000. You owe the broker £10,000 for the 10,000 shares you bought on a T20, so you’ve made a profit of £20,000 on the £10,000 you actually had invested in the first place - instead of the £10,000 you’d have made if you hadn’t leveraged.
When the 20 days are up, if the SP hasn’t moved upwards as much as you thought it would, you might choose to still stay in the game. In that case you ‘roll’ your T20 - ie you sell (settle) the 10,000 shares and immediately buy them back again on the same terms. If the SP has fallen You now owe the broker the difference between what you paid for them an the settlement price you just achieved. If they’ve increased, you have the diffference in cash in your account.
And the next question is ….?
Hi, recently in here.Can you explain leveraged contracts.Are you referring to spread betting?
Certainly not anything to do with ISAs as the value is way above the £20k limit. It seems someone(or several someones) are rolling over leveraged contracts.
Meant to say B&ISA. Not sure there are any tax advantages to a B&B these days but might be wrong.
Sorry, but I don’t think that was a 1,000,000 trade … always assuming you’re talking about the trades at 11.00am that were late reported. They were 21 secs apart and second trade was .05p dearer than the first. Same again at 1623 - two 500,000 trades 14 secs and .1p difference. Same at 1618 with a pair of 700,000 trades. All three of those are either B&B or someone rolling over a T20. No great mystery!
thats the target ive set 30p within the next 2 years
I hold a lot of these, I'm seeing increasing demand to secure large stakes. You will always see delayed large deals being worked through. It's not just about the imminent anticipated £80m-£100m investment, but the prospect of several follow up rounds of similar amounts. In a globally unstable environment, these sorts of investments provide a valuable alternative investment class, that is highly sought after. I'm looking for 30p over the next 18 months.
So how does one get a MM to allow them to buy cheap shares?
Protected portfolio, definitely a large buyer(s) in the background getting their position worked by the MMs, hold onto those shares if this buyer wants a big position make them pay for it instead of giving it to them on the cheap
P LRGS
I believe there are 2 late reported 1 million trades, be interesting to see the markers!!
at 7.25 pence - I couldn't check timestamp as not on the list of trades. Suspect it's the same who was accumulating yesterday late on in the day.
.. has just flashed up on my advn monitor