Plus500 Share Discussion Threads

[sif12] 21/4/2020 16:48

where did you get the s and P Forward PE figure from?

Im looking at entry points when the PE goes below 15 ...ish

[fxprotrader] 21/4/2020 16:48

German

NO it isnt. Too much cash being accumulated. Pent up demand will see a significant bounce back by end of year

[aleman] 21/4/2020 16:45

Oh, the economy is screwed. The damage has not been digested yet. S&P500 forward 12m P/E is 18.7 - still around it high since 2002 - but earnings forecasts continue to be slashed as terrible Q1 results and guidance come through. Governments don't even know what the fiscal damage is yet. Shares could easily fall another 50% once the new austerity taxes add to the lockdown's effect on earnings which are only just being realised. There's no upside left in general share prices on current ratings - only downside and plenty of it.

[sif12] 21/4/2020 16:37

lots of ifs, maybes and assumptions :) we could go back and forth, but lets just say from an investment planning point of view I see a further wave occurring and impacting economies- or at best we transition to a reduced lockdown and there is no hard second wave but a smoothing out.. either way i see the economy here and in US impacted into the end of year

[aleman] 21/4/2020 16:17

10m infected a month ago, and maybe 20m now, and maybe 25m before wave 1 ends, means only half the people left to infect. Most viruses find a little bit of natural immunity, too. The tranmission rate was around 2.5 before restrictions were imposed, as calculated in several countries. So it might only be 1.2 next time if 40% already had it and 10-20% naturally immune - and that is without any social distancing at all. Just extra handwashing and 2m spacing was estimated to have knocked R down to 1.2 the week BEFORE we went into lockdown. (Some now say lockdown was unnecessary, as per Sweden.) IF only half are left to infect, it won't come back at 2.5 in a wave, or even 1.2 because half now immune. It will come back lower than that because most people won't go back to old ways immediately. They'll keep keep washing hands and spacing, keeping R below 1. You just might get odd pockets here and there in a slow burn.

This is all assuming blood antibody tests are correct about infections being 50+ times higher than swabbing test positives. That might be wrong. 6 antibody studies have varied slightly from place to place but are giving much much higher infection rates than swabbing so far and death rates simlar to flu at 0.1-0.4%. They suggest the vast majority of people that had it did not even know they were ill. We need bigger antibody studies, though. There are loads under way and we should have more results soon.

Even if antibody tests are way out (unlikely I think), R is not going to come back at 2.5 or even 2. It will be much nearer 1. Any attempt at a second wave will be nothing like the first.

[sif12] 21/4/2020 14:38

aleman, how does that negate further waves? Say 10m people were infected 3/4 weeks ago. That still means we could see a further wave, if not more

[aleman] 21/4/2020 14:07

dged almost completely.
sif12
21 Apr '20 - 12:14 - 22283 of 22289

Theres also now a much wider recognition that without vaccines, removing complete knockdowns will only result in further waves.

I take it you are not following news about a half-dozen small blood antibody studies that found much much more infection than has been inferred from swab testing and has indicated mortality rates around 0.1-0.4%. Apply that death rate to UK death stats and it suggests 7.5m-30m people had already been infected in the UK 3 or 4 weeks ago. (Remember antibodies take that long to develop enough to test so all antibody test results published now indicate a rate of cumulative infection total nearly a month ago.)




The research also implies that the death rate is far lower than believed. At the time of research, 39 county residents had died — a fatality rate, based on estimated infections, of only 0.12 to 0.2%. California’s assumed death rate, based only on confirmed cases, is 3%.

[markbelluk] 21/4/2020 13:50

The Times is reporting Elimelech's departure is due to the pay row with investors

[rose_by_another_name] 21/4/2020 12:49

If the average punter loses 70% of the time
Plus will do just fine on average taking the
other end of the bet.

[djokovic1] 21/4/2020 12:46

Sif: Another point on upswing in oil prices. Yes oil prices will be expected to go up once the economies re-open but that is already priced in to the forward curve. The futures price for oil prices in the months further out are much higher than the current near month price.

So unless economies re-open faster and consumption recovers faster than the market expects, one cannot make easy money by just being long oil

[djokovic1] 21/4/2020 12:38

I wouldn't expect them to materially change their hedging strategy which has worked amazingly well for them historically. One of the reasons their margins are so much better than IG/CMC.

Partly the reason they said that market PnL could revert in the Q1 update is exactly due to that reason, if oil prices go back sharply to $60 there will be a negative market PnL. If, and this is a big if, customer positioning stays the same. However the reality is clients buy high and sell low. So the proportion of longs in the oil book has decreased from 90/10 to 70/30 as oil price has dropped. So if we do see a sudden up move in oil to $60, the negative market Pnl experienced would be less than the positive market Pnl they saw in Q1 due to oil.

The other thing I would point out is that I wouldn't expect the market PnL to be so large that it overshadows the spread PnL due to their risk management strategies of internalization and limiting client positions if one side of the book gets too large. For example, even with the extreme moves in Q1, which were favorable to Plus across the board, the market PnL was only ~30% of the spreads PnL.

[sif12] 21/4/2020 12:27

djoko, i hear you but thats their standard approach. you dont think their hedging more now? how much of a significant exposure would there be from an inevitable upswing in oil prices?

[djokovic1] 21/4/2020 12:18

Hi Sif,

No that is incorrect. Unlike IG / CMC they mostly do not hedge. What they state is over time they expect market PnL to be 0 (which it has averaged out to be the case) but in any one quarter they can definitely experience positive or negative market PnL as their book is mostly unhedged. (Thats why we saw a big positive PnL number last quarter)

Chucko: Q1 we had oil going from $60 to $20 and some similar sharp down moves and they made a bucketload of market PnL (along with spreads) and clients were similarly long positioned going into it. So all-in all I expect these oil moves to be very positive for them: both spreads and market PnL.

[sif12] 21/4/2020 12:14

Sailing Johns already did a pretty comprehensive bit on numbers but Oil will stay volatile for a few months now and probably into Q3 at least.

Theres also now a much wider recognition that without vaccines, removing complete knockdowns will only result in further waves. vaccines are still some months away- clinical trials id imagine at least 3 months. on that basis, i think general stock market will fall again maybe Q3.

All of the above meaning PLUS will see a lot of volatility trading for most of the remainder of this year

Lets say Rev for Q2 inline with Q1- which Is conservative.
Q3 and Q4 half of Q1.
That gets us to around $900m? Earning will be around $300m? so if sentiment holds up - (AND its a big IF- However good the numbers are here, if people are desperately selling PLuS will go down) I see share price moving past 2000 to 2500-3000 potentially? and then falling back again....But if they are targetting the high value customers, and increased retention 2021 Revs of $500m+ may allow the share price to maintain above 1500

[sif12] 21/4/2020 12:12

djoko, chucko the financials do state that they make most of their money on the volume and spreads not on the positions. so hedged almost completely.

[chucko1] 21/4/2020 11:36

I pity anyone who thinks they know the oil market! Even the big boys have their heads spinning, so the PLUS punter is merely guessing. The danger for PLUS is that they have offered balance protection, and this could cost them. Unless they are entirely unhedged in which case they own possibly the entire deposit made by the punter.

They must have some degree of hedge in place, I would think.

[djokovic1] 21/4/2020 10:34

Wow, oil just getting decimated today. And it is Plus's most actively traded instrument (with clients long). And equity volatility continues...All looking good for Plus

[galileo8] 21/4/2020 07:52

Buy backs stepping up a gear, 45,000 shares yesterday

[ceri evans] 21/4/2020 07:31

I was in the oil industry from 1973 to 2014. At the end of the 2008 crash, it was common for traders to buy spot oil at around $40 and store it either onshore or in tankers, sell the oil on the forward market at around $90 and wait to make serious money. Of course the forward price soon cratered, making this plan not as attractive. The problem with WTI is the difficulty in moving it to a place where it can be stored easily, otherwise it's a no brainer to do the same as in 2008.

As background, I demonstrated to the oil world that paper Brent existed and created book-outs to cheapen the chains. In 1995, I sold the first ever freight futures. in 2003, I ran a programme which purchased 192 million of oil puts in 99 separate trades.

[eeza] 20/4/2020 20:22

FTSE staining its knickers, following the 'doodles.

[jw330] 20/4/2020 20:06

With Trump`s antics atm volatility is going to remain until the elections. The guy is promoting violence so can he can open the economy again. No matter what his beliefs are, the fact that he is willing to create division and tension in a country filled with guns just shows his level of intelligence. People are already mentally strained from the lockdown and what he is doing definitely will not help.

[chucko1] 20/4/2020 20:06

Just as well the contract PLUS trades is not the one that settled at MINUS $37. Down 250% on the day! That would stretch balance protection a bit.

[sif12] 20/4/2020 19:22

and in the spirit of sharing on a relatively sensible BB, if youre looking for any potential opps at the moment.. much like the guys who sold the pickaxes during the gold rush.. maybe check out some of the super tanker owners. there is nowhere to store the oil.. so premiums on tankers are going through the roof. DYOR etc. i wont name any names incase its seen as a RAMP.

Sif