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@DarkEnergy i believe you are exactly correct with this great find in the take over code. What Mac is suggesting is obviously a reasonable way of countering your CFD, but to purchase shares and take a CFD out at the same time to be neutral makes no sense. Also if closing a position it would be cheaper to pay the contract up rather than buying the same amount of shares. Unless there is something that i am missing.
Yes Mac that makes sense, but there are two transactions on the 8.5, a purchase of shares and a CFD short for the same price (not close to). The dealings were undertaken on the same day 22nd October. What numpty in their right mind would tie up £200,000 on a neutral transaction? This is the most interesting this board has been in some time, i might be totally wrong just trying to find a solution haha!
@mac why would you need to purchase physical stock to close a CFD short? It would be much more expensive to buy the shares than just close the CFD? to me its clearly a clever transaction, a purchase of shares with a hedge (CFD Short). The opportunity to do this wouldn't come around often as you're expecting the share price to over double in a short period.
@stonk i noted yesterday two theories but didn't get much traction in the chat. One was that your scenario is correct or a second that this is one trader purchasing shares and taking out a CFD as a hedge for downside protection, with a stop loss of double the share price that he bought in at. If the sale goes through, anything above double the share price at the time he bought in, is profit. If the sale falls out of bed he has the downside protection for the price that he bought the shares back. with a risk probably 5-10p per share. Thoughts? It is definitely two separate trades though (who ever is doing this though is building quite large position).
Can UBS sell the CFD and the leverage the position by owning physical stock? My reasoning for posting on here was to see how solid a theory it was. Although UBS leveraging the client position was really just a by product of the main theory.
I dont know enough on CFD's and stop positions to debate heavily. My thoughts were that as soon as the stock trades above the stop loss you are out. Because it is essentially a bet on the market?
New poster - admire from a far, been in since before suspension but wanted opinions on our (me and a few friends) theory of the Form 8.5's.
The form 8.5's show a purchase of around 600k shares at around 30p, they also show a CFD of the exact same.
CFD structure... 30p purchase - short to 0p (with stop loss at 60p) - gives a 30p swing for volatility and sentiment without cashing out for a loss until a sale has gone through.
At this point, if the sale falls out of bed and the stock tumbles to 0-5p there are minimal loses due to the gain on the short.
If the sale goes through, anything above 60p (due to the stop loss on CFD) will be profit. £1.50 per share sale = £0.90 profit per share?
Either that or someone has taken out a CFD short and UBS have taken a neutral position by purchase the same in physical stock.
This seems an extremely clever way to trade this stock when looking for upside with minimal exposure.
Thoughts?
Sumo - I understand that generally they are not traded daily. Although at the start of this thread BB stated he purchased 100k shares at 10:30am recorded instantly as a buy. My Purchase last week was shown as a sale and then as a buy today. If the share was as illiquid as you think after a week or so of pure sales, how have they suddenly come up with 2 million in volume to be purchased and recorded today? Some jiggery pockery going on i'm sure. Long may all the buys continue :D!
I don’t think it’s so much “buys” today but market makers playing the SP. I placed a buy last week, as soon as the buy was placed it was placed as a sell on the buy/sell thread. Today the exact amount that I purchase has shown as a buy. Cannot be coincidence. The only reason I can see for this is to manipulate the SP so that BMR can sell a lot of their shares without being obvious. Although I am new to this forum, but I don’t think that’s how it should normally work?