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SINGLE STOCK FUTURE TRADING Shaun van den Berg PSG Online: Head of Client Education _______________________________ James Boardman JSE Derivatives Wednesday,23.

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Presentation on theme: "SINGLE STOCK FUTURE TRADING Shaun van den Berg PSG Online: Head of Client Education _______________________________ James Boardman JSE Derivatives Wednesday,23."— Presentation transcript:

1 SINGLE STOCK FUTURE TRADING Shaun van den Berg PSG Online: Head of Client Education _______________________________ James Boardman JSE Derivatives Wednesday,23 May 2012

2 JSE –Central Orderbook PSG Online –What are SSFs –Terminology –SSFs versus Equities. –Risk –Trading Strategy –Pricing –Account Registration –SSF Simulator OVERVIEW

3 JSE - A CENTRALISED MARKET

4 JSE – EVOLVING MARKETS From this…

5 JSE – EVOLVING MARKETS … where you could expect this…

6 JSE – EVOLVING MARKETS … to this. Quiet, calm efficiency

7 JSE - A LEVEL THE PLAYING FIELD

8 JSE - SSF GUARANTEE HIERARCHY

9 JSE - IT WAS EASY TO SAY NO… NO!

10 Introduced competition on rates Now they all come to you, hoping for a yes… JSE - CENTRAL ORDERBOOK You Please?

11 JSE - SPREADS

12 R100R99R101 R1.5 R1

13 Can’t compare absolute spread values between instruments Need to compare in percentage of exposure Value will be in basis points –1 Basis point = On average spreads on Top40 Futures are 25 Basis Points JSE - SPREAD COST BID OFFER BID OFFER ( ( ) ) 2 = Spread%

14 Parking tickets! Magnus de Wet James Boardman Rudolf Oosthuizen – JSE - CONTACT DETAILS

15 SSFs are contracts entered into between 2 parties Right for the buyer to take delivery of that stock on the date of the contract’s expiry, a ‘deposit’, known as the initial margin is made and used as security Close out or Roll positions An SSF contract is made up of 100 shares geared at around 15% PSG - WHAT ARE SSFs

16 Standardised contract SAFEX Partially matched orders simply expire! Expire March, June, September and December Including all relevant dividends and interest Go long or Go short Marked to market daily (MTM) PSG - SSFs EXPLAINED

17 Underlying Going Long Going Short Closing a position Expiry date Initial margin Variation margin Rolling a position PSG - TERMINOLOGY

18 Highly capital efficient Low brokerage Very liquid Earn interest Benefit from Corporate Actions Cheaply diversify risk Hedge your portfolio PSG - BENEFITS

19 PSG - SSFs OR EQUITIES Joe is confident that Sasol Ltd shares will increase in the coming months. He has R36,500 which she can invest. Sasol’s share price is R365, therefore she buys 100 shares. 3 months later the price has increased by 10% so he sells his shares to make a R3,650 profit. His return on his investment is 10% John is confident that Sasol Ltd shares will increase in the oncoming months. Sasol’s share price is R365, therefore he buys a Long Sasol SSF contract (JUN12 SOLQ). The initial margin set by the broker is R4,950 which is paid by the buyer. After 3 months the price has increased by 10% and the investor closes out his position and sells out of the Sasol SSF contract he is holding. His profit is R3,650 His return on his investment is 58%. Joe (Equity / Share Trader)John (SSFsTrader)

20 Jack is an SSFs Trader Jack is confident that Sasol Ltd shares will increase in the coming months. Sasol’s share price is R365, therefore he buys a Long Sasol SSF contract – JUN12 SOLQ at R4 950 initial margin which is paid by the buyer The Brent Crude price decreases by $10 a barrel which negatively impacts on Sasol’s share price, which drops to R335 per share The SSF contract is made up of 100 underlying shares. The margin call for Investor B to continue trading is 100 x R30 (R365 – R335) = R 3000 variation margin which needs to be paid in to keep the investors position open. He has now laid out R 7,950 After a month the share price continues to drop to R300. The investor chooses to close his position and must pay in a further R 3,500 variation margin. His total outlay is R 10,950 but he receives his Initial margin back, so his total loss is R6000 (-121.2%) PSG - UNDERSTANDING RISK

21 Interest payable is determined daily by the market maker in relation to the ruling SAFEX rates. Interest will be paid on cash balances at a rate linked to the JSE Trustees rate. PSG - SSF PRICING

22 Brokerage on the Central Orderbook is charged at 0.4% (excl VAT) of the value of the transaction. 14% VAT on opening leg and 14% VAT on closing leg 0.912% total A booking fee of R60 PSG - SSF COSTS

23 Identify the candidate Wait for the breakout Set a reasonable target price (TP) Allow the share to retest Know when your trade has failed Exit at your price target (TP) Be patient Be disciplined PSG - TRADING STRATEGY

24 The more times a share price has touched these areas, the more valid these levels are & the more important they become. The longer these support & resistance levels have been in play, the better the outcome when the share price finally breaks out. PSG - IDENTIFY THE CANDIDATE

25 Once prices are set to close above a resistance level, a trader will establish a bullish position. When prices are set to close below a support level, a trader will take on a bearish position. The exit point itself should be set at a critical price level, e.g. Support & Resistance PSG - ENTRY AND EXIT POINTS

26 PSG - ASCENDING TRIANGLES TP

27 Mentored learning Full day workshop (09h00 – 16h00) –Monday, 25 June 2012 Fundamental Analysis & Investing Technical Analysis & Trading Cost: R200 PSG - MARKETWORX

28 Click here Submit your details Login Select your SSFSM account (top right) Reset simulator Select “New Order” PSG - SIMULATOR TRADING

29 Click here SSF ACCOUNT REGSITRATION

30 SSF Margin Initial margin per contract Top 40 Shares ALSI & ALMI Copper, Gold, Platinum & Silver WTI Crude Oil

31 SSF Central Order Book ALSI – Most popular Top 40 Shares Liquidity, Cheap, Tight Spreads Long & Short

32 SSF Order Book – ALSI Trade Margin = R Exposure = R Cost R25 per contract R10 per point 100 points move = R1000 Buy Moves 300 points up = = points move x R10 = R point spread = R10 x 2 points = R20

33 SSF Order Book – ALMI Trade Margin = R2805 Exposure = R Cost R55 per contract R1 per point 100 points move = R100 Buy Moves 300 points up = = points move x R1 = R300 x 5 = R Contracts x R2 805 = R point spread = R1 x 40 points = R40

34 SSF Simulator (SSFSM) Step 1 Select SSFSM Step 2 Check R Step 3 Click Reset Simulator

35 New Order (ALSI)

36 New Order (ALSI Buy) Step 2 Enter Contracts Step 1 Select Direction Step 3 Enter Price (R) Step 4 Click Submit Order Example 1: Buy (Long)

37 Trade History (ALSI Buy) Margin Movement Select Trade History

38 Financial History (ALSI Buy) Select Financial History Margin & Brokerage R25 Margin = R Exposure = R Cost R25 per contract R10 per point 100 points move = R1000

39 New Order (ALSI Sell) Sell (Long Close) Moves up to = 300 points move x R10 = R3 000 Step 1 Select Direction Step 2 Enter Contracts Step 3 Enter Price Step 4 Click Submit Order

40 Trades History (ALSI Sell) Margin Returned Profit or Loss

41 Financial History (ALSI Sell) Select Financial History

42 SSF Simulator - Portfolio Select Portfolio Example 3: Sell Moves down to = 300 points move x R10 = R3 000 Example 2: Buy Moves down to = 169 points move x R10 = R1 690 loss (Margin Call)

43 New Order (Remgro Buy) Step 1 Select Direction Step 2 Enter Contracts Step 3 Enter Price (R) Step 4 Click Submit Order

44 Trade History (REM Buy) Margin Movement Select Trade History Margin = R Contracts 5 x R2 122 = R Exposure = 5 x 100 x R = R65 750

45 Financial History (REM Buy) Select Financial History Margin & Brokerage R Brokerage = Exposure R x 0.47% (VAT incl) = R309.03

46 SSF Simulator - Portfolio Select Portfolio Exposure 5 x 100 x R = R65 750

47 New Order (Remgro Sell) Step 1 Select Direction Step 2 Enter Contracts Step 3 Enter Price (R) Step 4 Click Submit Order

48 Trade History (REM Sell) Margin Returned Select Trade History Profit or Loss Sell (Close) REMJUN12 R Exposure = 5 x 100 x R = R71 000

49 Financial History (REM Sell) Select Financial History Brokerage & Profit Brokerage = R x 0.47% (VAT incl.) = R Profit = R – R = R5 250 = R5 250

50 General enquiries –0860 PSG PSG ( ) –www.psgonline.co.zawww.psgonline.co.za Trading assistance –Lawrence Marshall Educational enquiries SUPPORT

51 SHARE YOUR THOUGHTS facebook twitter YouTube Click on the relevant icon

52 Contact us Thank You


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