Singing Pig

Maybe one for Zulu.  I have the feeling that this could be a turbulent summer and we might just see a fall in some indices.  In particular maybe the FTSE 250 has  got a little ahead of itself.  I have a very long portfolio (I hate that word) at the moment and I want to look into a bit of insurance by shorting the FTSE 250 for the next 3 months either by means of a spread bet or a CFD.  This types of contracts are easy to find for the FTSE 100 but not so easy to find for the FTSE 250.  Anyone know a company that can offer these?

Hi overseas

cfd's, I like iii.co.uk for cfd's although only now opening an account,LIBOR+1.5% long trades very competitive and-2.5% short (standard)

Spread bet although I have used differant firms I am now looking at e-trade free level 2 data with account

Despite the bearish news the trend up is still intact I run a stoploss of 15-20% on trend break and then short my share exposure as they break,take it off when downtrend finishes,mixed success but it stops catastophic loss,been there before and once is enough,

another way is to buy a put option 10% out of the money 6 months expiration on trend break,this is fairly cheap insurance,I veiw it the same as buildings insurance i don't want it but if theres a fire (crash) then it will be worth it,helps me sleep at night,if you haven't traded options before make sure you put a limit order in as the brokers can take liberties with newbies on order fillment especially uk

 

Thanks Zulu.  The idea of the out of the money put option is one that I have also been toying with.  I think I need to get some figures together and do some "what if" senarios and compare the cost of the various products.  I did find a FTSE 250 CFD in the end but the cost is high particularly if a guaranteed stop is built in.  Basically equates to a spread of 85 points on the index which seems daft to me. 

 

 

I personally would not use their guaranteed stop,all the market makers know where they are and on opening you will often get them triggered as the MM run the stops in thin markets,both IG index and city index offer spreadbets on FTSE250 and most indexs I'll let you know how I get on with e-trade

The advantage of the put is it lets you participate in the upside if your wrong and the market doesn't crash yet protects you from catastrophic loss,are you familiar with the pricing and implied volatility?One other thing it is expensive to always be hedged much better to do it selectively although you run the risk of a large move,sometimes the options will be to expensive in these cases run a stoploss (your choice 10-25%mine are  typically 15-20%)and then short the shares to go flat if you want to hold onto them(don't think about it when it happens just do it)

Good point about the guaranteed stops, I'll bear it in mind.  However this would only apply to individual shares rather than indices I guess. 

My usual money management (preservation) strategy is via stop losses and I tend to keep them tight.  I usually use trailing stops of 7-8% for individual shares.  Its not so much of a problem for me to sell as I am out of the UK and not liable for CGT.  Just looking at creative options at present. 

 

william o'neil "CANSLIM" also likes an 8% stoploss do you follow his methods at all?

Some pro buyers put in a fishing order on the open to catch the many inexperienced private investors who tell their broker to sell (at the market),I've always liked fishing ;)

Zulu:

william o'neil "CANSLIM" also likes an 8% stoploss do you follow his methods at all?

Some pro buyers put in a fishing order on the open to catch the many inexperienced private investors who tell their broker to sell (at the market),I've always liked fishing ;)

Yes the CANSLIM method, I do use a similar version myself for one of my favourite screens.  I think it could be more sucessful but maybe a victim of its own publicity as quite a few people are looking for similar shares these days.  There is a similar method laid out in "Rule #1" by Phil Town.  It's a bit "American" but includes an assessment of the companies assets to make sure that the companies are not growing for growth's sake but are actually adding to the companies asset base.  I don't agree with all his findings but combined with CANSLIM it makes for an interesting screen. 

So going back to your fishing order.  How would that operate in practise?  Is it related to tree shakes or is it something completely different?   

A buy order (very low)is put on the market near the close GTC,the next morning any unwary sellers at the market will fill this price if there is a surplus of sellers,I'm looking forward to getting level 2 data and may even catch a nice big fish!