Optos Share Discussion Threads

[harvester] 20/1/2015 22:14

ALP: yes, critical day .
What are you expecting ? Guessing ??
Next Sunday Greek election . Two black swans on the way ?? Black Thursday followed by black Monday ? we shall see. Batten down the hatches .

Found out a bit more about FXCM:
apparently they were allowing forex traders leverage of 50:1 in the US (restricted to that by law/regulation) and 200: 1 elsewhere . Still advertising that leverage allowance this Monday . Not the only firm giving generous leverage allowance to their forex traders . Still advertising that offer this Monday after the rescue deal .
They had also committed to not persueing claims against forex trading customers which had negative equity (losses exceeding their collateral) . Unbelievable .
It has also been stated that they did not have to keep customers cash separated from the firms, called comingling . If the firm failed their customers had no priority in bankruptcy . Info comes from financial news item on my smart phone .
Not sure to what extent that applies to other customers not trading forex .

[alphorn] 20/1/2015 16:47

...watch out for dark swans on Thursday.

[alphorn] 20/1/2015 16:45

I am opening an online account with Swissquote. Am over the limit in the UK and the private bank in Geneva is becoming just too expensive; I will study the papers when they arrive but it looks as deposit insurance goes up to Sfr100,000.
These black swan events remind the need for good housekeeping.

[praipus] 19/1/2015 10:23

Has anybody had any experience of Berkley futures & Options broker?

[harvester] 18/1/2015 19:21

hektorp:
Not planning to spreadbet on VOD stock since can do short-term trading of stock with shares since on flat rate £5 commission . Just have to allow for the cost of stamp duty , i.e. try to catch bigger moves for swing trades . Can buy long spreads for hedging .
Short-term trading to add to longer term investments .
I don't expect a crash in Tesco . It has had its crash already and under new CEO seems on the road to recovery .
I may add to positions in oils and miners when they get low enough .
Also holding appreciable cash reserve to take advantage of any market crash .
Good luck with your trading .

[hectorp] 18/1/2015 12:26

yes I used Sucden for years, though came a cropper on 9/11 when I as running a USD/sterling position. That aside.
Options spread betting, ie VOD. agree very narrow spread is all to the good.
Why however, not simply place a bet on VOD stock, I must look into it. I have an account with IG.
Since 2007, I moved half my wealth into PM's , and now, I am again enjoying a small run up. In hard times there will be merit in gold and silver. But for shorter terms, I would be interested in returning to Options.
My own view of stocks this year, is there will be a crash in the share values of many retailers, eg TEsco, and further falls in oils, eg TLW Tullow, and even the likes of NEXT which is over £60 a share. But gold miners may do better than of late. However, if the US Market is to go to 20,000, or down to under 16,000, is at present impossible to know.

[harvester] 18/1/2015 12:09

Alpary who went insolvent last week say that client funds are segregated .
How long will it tke for their clients to recover their assets ?

[harvester] 18/1/2015 12:07

ALP: fxcm should be alright for us now after the rescue but I agree we need to diversify more .
I also use Sucden who IMO are more trustworthy being a more conservative , British trading house . I have more exposure with them but have also been winding down positions with them for other reasons .
I am considering starting a little bit of options spread-betting with IG again but will keep to heavily traded shares like VOD where the spreads are narrower .
I don't like options trading with spread-betters too much since they trade against you in their own interest and try to keep the spreads wide since they make their money from the spreads .
Like you , will look around to diversify more after last weeks tumultuous events .

[alphorn] 18/1/2015 11:41

Harv - FXCM, yes. I need to consider spreading the risk more - who else do you use? I shall look at Swissquote as well.

[harvester] 18/1/2015 00:44

ALP: maybe the SCB should have re-set the peg level to say 1.1 temporarily to partially alleviate the pressure .
Did you have much exposure left last week in your fxcm account ?

[alphorn] 17/1/2015 19:55

Harv - They may have worried about a € move next Thursday but I just think that they were surprised by the extent of the moves.

[harvester] 17/1/2015 18:34

Under the heading "FXCM Financial strength"
Fxcm had previously published financials data of its operations including data for September 30th 2014 as follows:
Total revenue: Q3 2014: 116.1
FXCM customer cash: $1.332 billion
FXCM cash on hand: $ 326.7 million
FXCM debt: $188 million
Calculation shows net cash (after deducting debt) : $ 188 million

Wall St Journal indicated that estimates of customer losses above collateral were of the order of $225 million which appears to have infringed regulatory capital requirements .
That throws some light on the situation how a big firm like FXCM got so quickly into trouble after the sharp forex market moves .
At the end of their financial statements they seem to have given themselves a pat on the back for their financial prudence by declaring:

"What you should know about your broker's financials

FXCM believes in making our financials transparent so that clients and potential traders know about the performance and health of FXCM as a company. FXCM strongly believes all traders should be asking his or her broker some pivotal questions regarding the company's financial stability.
Questions to ask your broker:

What were your revenues?
How profitable is your firm?
Do you have a top-tier third party accounting firm auditing your financials?"

Sounds not only their forex clients but FXCM also were not expecting to meet the black swan !

[harvester] 17/1/2015 17:40

ALP: yes, I said so in my post above but still not quite explains it fully for the reasons stated above .

Did the SCB have much choice ? Apparently the heavy inflows of hot money was depleting their money trading reserves much more than they had expected a few days earlier .

[alphorn] 17/1/2015 17:30

It has to be said that the Central Bank very recently reconfirmed the fix at 1.20 - that is why IMO so many people were wrong footed.

I believe that they were shocked by the impact on Thursday.

[harvester] 17/1/2015 17:29

Hektorp: yes, these are interesting but dangerous times for investors and traders on the stock-market .
In theory the option traders bible advises to write options when volatility is high and to buy options when it is low . I don't think that advice is appropriate for the extreme black swan events and sky-high volatility arising in market panic situations .

[alphorn] 17/1/2015 17:28

Zastas - I have had no forex options open for a while.

I have always had some mis match of income/expense which will get hit. Asset wise looks very good; but my guess is that it is temporary - a wild guess would put the € back to 1.10 at some point. But a wild guess.

The stock market has to be viewed against a basket of currencies and although the CHF price has dropped this may not be the case against other currencies.

[harvester] 17/1/2015 17:25

If this skirmish had happened a few years ago I had much bigger stakes at risk since I had a substantial share portfolio with FXCM as collateral . However, I found their share transaction commissions too steep and moved the entire share portfolio to Halifax Share dealing who only charge a flat £5 per trade .
That left me much less exposed on Friday than I would have been otherwise on Friday with shares in nominee accounts .

[harvester] 17/1/2015 17:19

Even if client funds are ring-fenced in normal times I recall reading stories where firms "borrowed" from the client funds to alleviate immediate cash shortages . Once client funds get mixed up with brokers funds it gets very complicated to attribute ownership even if the intention was to borrow for a short-period bridging loan . That should never happen without client consent and if it takes place is probably a criminal act for which the the offending executives can or should be held liable .

[hectorp] 17/1/2015 17:17

I still watch the thread from time to tome. Yes Harvester we are in Black Swan territory such as the Swiss move the other day. High volatility is the oder of the day too. There is the GReek election on the 21st or thereabouts, they could leave the Euro soon after. THe gold and silver charts show considerable improvements, Stocks MAY have topped more or less for this cycle too. The Russians just turned off the gas to 6 countruies, and crude fell 50% of course.
So the world is not what it was 2 months ago.
I also believe that the Russians or Putin at least have sadly more to say about all our futures than we may like.
I am not sure where this leaves written options, but high volatility means swings , which could suddenly shove what was looking safe, very unsafe or very unprofitable.
H.

[harvester] 17/1/2015 17:13

Looks like we had a narrow escape on Friday .
Amazing how quickly such a big company can run into trouble .
The FXCM traders who took my orders on Friday declared it was business as usual just when the firm was in urgent need of an immediate rescue package on Friday . They probably did not realise how precarious their job position was then . At least my only risk was to lose money but a substantial chunk of cash . FXCM assured me that client assets were ring-fenced and secure but in a bankruptcy situation that can not always be trusted . Even if client funds are not actually lost , they are often inaccessible when administrators are appointed .

[harvester] 17/1/2015 17:05

It appears that in these volatile times there are more black swans around than the big players hedge against .
It appears that many forex traders were wrong-footed by the SCB statement last Monday that they were planning to hold the 1.2 euro/SFR parity in the face of the forthcoming ECB measures of QE . May be the forex traders speculated that substantial QE was already fully priced in the exchange rate but that German resistance to this QE would lead to less than expected QE measures, disappoint the market and lead to recovery of the Euro from recent falls . Just a hunch . Otherwise I don't understand why so many forex traders were so severely wrong-footed and bet against the SFR in favour of the Euro in pair-trading .
Do you have a better explanation , ALP ?

[harvester] 17/1/2015 16:52

Here is the article of the rescue deal . Well spotted , ALP .

hxxp://www.wsj.com/articles/fxcm-in-talks-for-rescue-package-from-jefferies-1421431006

I had anticipated that FXCM might be at risk due to the strategic error of poorly executed systems change to Phoenix which must have lost them many retail customers . That was one of the reasons for winding down my option positions with most expiring in December .

[zastas] 17/1/2015 14:51

OK, I remember at some point you sold options in FX too. I hope you are not -too much- on the wrong side. Anyhow, as long as they are covered fully with cash/liquid assets it's not a big problem.

Swiss stock market down of course, but for most Swiss natives and residents it's a welcome bonanza: very cheap shopping/holidaying across the border. And super-cheap mortgages too. Two sides to all currencies!

[alphorn] 17/1/2015 11:11

.......just wait until next week! I expect more gyrations in the forex market.

Very poor management by the Swiss central bank.

[zastas] 17/1/2015 11:01

$300 million enables FXCM to carry on with trading business as usual.

Its owners though, the shareholders, may not see all or even much of their equity back. At least soon, as some client/trader losses will take time to recover if they haven't ready cash to transfer into their FXCM accounts. Much will be recovered , even if it takes their homes to be sold etc.

I am not losing any sleep over it. Just re-assured my opinion to stay out of the typical highly-leveraged FX trading. Alphorn could be feeling very rich though, in the Swiss mountains.