Spook1304
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Posts posted by Spook1304
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11 minutes ago, KoketsoIG said:
Hi @Spook1304,
Thank you for being a valued member of our community. Please note that the initial post was about when futures contracts expire and your subsequent replies were not clear about what you were asking. It seemed as if you were asking us to predict the spot price at the future's expiry.
Also please note that we have mentioned that the cash diverts towards the future, meaning the price tracks and when a futures contract expires, the price of the futures contract at expiry is nearly the same as the cash spot price.
Thanks,
KoketsoIG
Thanks for the reply @KoketsoIG.
My question is mainly around the convergence between the expiring future and the spot price. At the time, I was monitoring the Nov 23 London Gas Oil Future and spot price. At expiry, there was still a fair gap between the two instruments. Where-as all of the literature (both IG and otherwise) has said this should not be the case.
Unfortunately I am unable to confirm what the future price was at the time as it is no longer on the platform.
Can you confirm 2 things for me:
1 - Do the spot and future markets converge upon the future's expiry (are they the same price when the futures contract expires)?
2 - Can you provide the settlement price for the Nov 23 London Gas Oil Future Contract AND the spot price at that time? My expectation is that these should be the same value (or very close).
Thanks again for the reply. -
So the future expired and there was still a large gap between the Spot price and the expired future.
This goes against what IG say on their site (below) and what @KoketsoIG mentioned above. The Spot market doesn't seem to track the futures price as it should. On the expiration of a future it should be equal to the spot price. I've emailed the helpdesk asking for an explanation and exactly what the Spot market tracks as the spot and future (which should converge) don't seem to be tracking/calculating as the IG website suggests (and every other source on futures as posted above).
Any input from the community/IG is welcome.
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Didn’t work out mate. Futures markets are meant to expire at the price of the spot market (or vice versa) according to every source everywhere including IG but after testing and getting in touch with their helpdesk to confirm, they said that the undated contract doesn’t do this so there is no guarantee the undated and future contract will be the same price when it expires. They’ve yet to specify what exactly the undated contract tracks as the whole point of the futures market is to guarantee a price in the future which is settled at the cash price of the instrument on expiry which doesn’t happen here on IG (despite their literature showing otherwise). Unless someone from IG wants to explain exactly what the undated contract tracks? For now you can just assume it’s some arbitrary instrument. Getting bucket shop vibes
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From trading page it shows how the future will be settled which is based on the "Official closing price of the ICE Gas Oil Future on the last dealing day". Im curious to what the spot is will do when this is settled as everything I've read shows that these two prices should be the same on expiry so the spot should move to meet this or there should be some kind of adjustment to one of the instruments.
Can anyone from IG or the community advise what the expected course of action is here?
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Anyone assist with the question above?
EG, There is a future due to expire tomorrow - London Heating Oil.The cash price is sitting at 811 and the future price is at 846 a 35 point gap.
Is the expectation that the price will close that gap by 1630 tomorrow?From everything I've read from IG and other sources, the expiration price should converge with the spot price (or vice versa) and they should both be the same but a 35 point gap seems pretty large.
Should I expect this gap to close or will it expire with a gap then be settled up afterwards?
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Thanks for the reply @KoketsoIG.
I'm colleting overnight interest on my cash position and want to ensure that the future and cash values will indeed converge with each other on 17th Nov so the price for both should be the same. This means i should keep the interest payments I've been getting daily and also profit from the gap between the CASH and Future contracts as everything I've read says that on expiry, the cash and futures contracts should be the same price.
So for my example:- SELL Cash - 3634
- BUY Future (DEC23 - Expires 17th Nov) - 3604
If the price of Natural Gas remained the same until the 17th Nov, would the Future remain at 3604 and the cash price gradually make its way down from 3634 to 3604? so by 17th Nov, both Cash and Future would be at 3604?
Thanks
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@Caseynotes Would love your expert input here
On my demo account, I have 2x positions open for Natural Gas,- BUY Future (DEC23) - 3604
- SELL Cash - 3634
- 30pt difference
According to what I've read, the gap should close come expiry date as depicted in my post above.
I'm currently receiving an interest payment for the cash position overnight (and paying a small IG fee).
I'm looking for clarification on what the future price will do come expiry time.
I'm assuming its one of the 3 outcomes below but not sure which and cant find much info on it.
If the cash price remains the same until expiry:- The future will climb gradually as the expiry approaches. Once the expiration date/time is hit, both CASH and DEC23 Future will be the same price - 3634 in this example. The 30pt gap will be closed.
- The future will expire at its current price 3604. The 30pt gap will remain. An overnight "adjustment" will be made to "artificially" close the gap.
- The future will expire at its current price 3604. the 30pt gap will remain. No adjustments will be made.
- The future will expire at its current price 3604. the 30pt gap will remain. The interest payments that were paid each night were daily "adjustments" to artificially close the gap.
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All of the above are wrong
I have trades open on demo to test the outcome but would prefer not to have to wait until the 17th Nov to find out. Any help is greatly appreciated.
Thanks.
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Hi,
I'm currently tracking cash/futures prices on some commodities (Crude Oil, Heating Oil, and London Gas) and would like to know how the futures contracts expire.
The expectation is that the futures contract will be the same as the cash price on expiration as per this IG article:
https://www.ig.com/ae/trading-strategies/what-is-a-futures-contract--201202QuoteWhen a futures contract expires, it will be equal to the spot price.
I'm looking for someone to confirm if this is the case and its not "equal to the spot price" via some arbitrary credit/debit function that happens overnight.
EG,
Natural Gas currently has a cash price of 3613 and a DEC23 Futures price of 3557 - a 56 point gap. The futures contract will expire on the 17th Nov - 14 days from now.
If the Natural Gas cash price were to remain completely stationary at 3613 until the 17th Nov, what would the DEC23 futures price do as time passes?
Would this slowly start to close the gap as the expiry nears and expire at ~3613 or would some debit/credit thing happen overnight to artificially close the gap and the DEC23 future would maintain the 56 point gap?
The article quoted above suggests that once the expiry date hits, both DEC23 Future and Cash price should be 3613 and if their prices were plotted on a graph, it should show them converging like the attached image.
Any input would be much appreciated.
Thanks.
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Hi, I'm looking for someone to sense check something for me.
I've been looking at trading cash positions overnight and collecting the premium for them (carry trade). I believe I've found a viable strategy but seems a bit "too good to be true" which suggests I'm mis-understanding something or missing a huge risk somewhere.
Heres what I have:
BUY Oil - US Crude (£1) - for 8233.3- £1 per point
This costs £1.40 to open and another £1.40 to close.
An overnight credit will be paid to me of £1.78 for each night I hold this (obviously this rate can and will change daily): (CHECK IMAGE ATTACHMENT)
then:
SELL Oil - US Crude (£1) DEC-23 Futures Contract for 8260.0 - £1 per point - Expires on 17th Nov 2023 - 17 days from now
This costs £3 to open and another £3 to close. there are no overnight fees or payments. (CHECK IMAGE ATTACHMENT)
so as the Futures price should expire at the spot price this should technically make an arbitrage scenario?
The difference in my BUY SPOT and SELL FUTURE is 26.7 points (I'm buying spot at 8233 and selling future at 8260). As the future contract will expire at the spot price, this should equate to £26.70 worth of profit.
On top of that I should make £30.26 in overnight "premiums" minus fees so:
+£26.70 from gap between spot and future
+30.26 overnight "premium"
-£8.80 Fees
= £46.16 profit (assuming a premium of £1.70 per night which is likely to change for better or worse)
Now I don't think for a second that the above is correct, and I believe I'm mis-understanding or missing a huge risk somewhere but for the life of me I cant see where.
I did try this on a spread betting account but those account use "Forwards" instead which do not expire at the spot price (very sneaky) but "Futures" definitely should expire (and be settled) at the spot price if not rolled over.
Can someone let me know where I'm going wrong here?
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1 hour ago, Goldengawd said:
Thanks for the response Spook, I've seen that info before I believe its the last time you can purchase an option - I'm looking for the expiry times. One of the IG helpdesk guys also thought that was the expiry time then corrected themselves.
Technically, after the last deal date/time, you are bound to that deal regardless. I believe the option can and will still track the underlying (as some of them trade out of hours) but there isn't much you can do about it even if you wanted out for any reason. Actual expiry depends on the instrument.
I'd recommend rolling or getting out prior to that date/time as your winning trade can end up being a loser (and vice versa) if the market shifts unexpectedly after hours.
This article might have the answer you're looking for (Check the notes section at the bottom)
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Sorry, cant edit my original post - this also applies to Daily Options:
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You should be able to see the expiry details of an instrument on the trade page:
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50 minutes ago, AndaIG said:
Hi @Spook1304
Thanks for the question
When a rollover is done on a VIX position the initial position is closed at the official closing level of the day, before the last dealing day of the contract, +/-closing spread. The new position in the next contract opens at the official closing level of the new contract, in the same day, +/- opening spread.
1. There are no other costs other than closing and opening spread. You would realise any running profit/loss from the position in the prior contract
2. Yes, stops and limits would be carried over to the new position
3. We offer a concession on market spread when rolling over shares, but that would not be applicable in this case. So there is no benefit other than convenience.
Hope this helps
Anda
Thanks for the reply - that's helped a lot.
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So from further reading it appears the following:
(If this doesnt look right - please feel free to correct me)1. My existing contract would be closed off at the current price of 18. This would secure a loss of £100 on my account.
2. A new position would be opened for Oct 21 contract with a price of 18 (give or take a bit for spread).
My other questions still remain though:
- Other than the loss of closing my losing position and the spread of opening a new position, is there any other costs associated with rolling over?
- Would my new contract be opened with the same parameters? (EG, if I had a 2 point stop loss and a 2 point profit target, would these be implemented on the new contract?)
- In terms of "Rolling Over" automatically through IG, does this provide any benefit compared to me just closing the existing trade and opening a new one in its place? (Is it cheaper somehow for IG to roll an existing contract than it is for me to open a new one?)
I'm currently testing this on demo but the next rollover isn't until 15 Sep so its slow going.
Any help is appreciated.
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from my understanding, this depends on your country and account type.
If you are a retail trader (not professional) and based in the UK then you are protected from a negative balance:
https://www.ig.com/uk/help-and-support/accounts-and-statements/my-accounts/what-happens-if-my-account-goes-into-negative-balanceYou may find the following link useful:
https://www.ig.com/en-ch/margin-callsWhen your equity value drops below your margin value, thats when your trades are at risk of being closed out.
You can see your equity and margin values at the top right of the screen when you login to your trading account. Keep equity above margin and you'll be fine.Hope this helps.
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32 minutes ago, jandj said:
At the beginning of August, one of the company’s VP’s sold 2/3 of their shares.
Then on the 24th, the CFO and a VP sold 2/3 of their shares ($3,000,000 worth of shares shed in total).
But the stock’s price rose considerably after this big sale, noticeable on the chart.
Why?
The short term stock price of a company doesnt not reflect the company's performance.
The best companies in the world can exceed all estimates, targets and expectations and the stock will still tank. The stock price reflects trader's sentiment. If enough people sell the stock it will go down regardless of how well the company is performing.Using your example above, some traders might see that stock as a bargain. A high performance company who's stock price suddenly dropped. Long term, the traders will know if the company keeps its current path of high performance, the stock will eventually bounce back. the old quote goes: "If the business does well, the stock eventually follows."
Another quote that has also served me well (despite me trying to prove it wrong multiple times...):
"insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise."After much back testing, you may find you will be far more successful buying when insiders buy compared to selling when insiders sell.
Best of luck
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Can anyone explain in detail what happens when a future contract is rolled over on a spread bet account?
Example:
£50 per point on the VIX - Volatility Index.
Purchase Price was 20 for the Sep 21 expiry.
Let's say (just as an example) the contract now expires tonight and the price is currently 18 (so the trade is currently sitting at a loss of £100).I have a couple of questions:
- What would happen to the existing contract?
- What would the new contract look like?
- What costs would be associated in rolling the contract over to the next month?
- Is there any benefit to "rolling" the contract automatically (is it cheaper?) or is it the same as me closing my current position at a loss and reopening a new position with the Oct 21 expiry?
Thanks.
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4 hours ago, ArvinIG said:
Hi @Spook1304,
To calculate the overnight funding for VIX you will need to use the formula : Bet size x Price x Swap Bid/Offer ( Bid for short and offer for long)
For further assistance please reach out to helpdesk.uk@ig.com
All the best - ArvinThanks Arvin.
So to stick to the example above:
VIX is trading at £20.
Bet set to £50 per point.
open a LONG positionthis would result in:
Bet size x Price x Swap Offer
50 x 20 x -0.0763
76.36Surely thats £0.76 and not a £76 overnight fee to hold a £50 per point position overnight?
Can you post a link to where you got that formula?
Futures
For the futures version of the same trade, with the current spread of 0.2, you pay £10 if you buy and instantly sell (using the same parameters as above) which seems reasonable. If the Contract gets to expiration (currently Sep 2021), I assume the only cost for the rollover is the spread to close the existing contract and re-open the new one?So
Sep 21 - 18.73 / 18.93
Oct 21 - 20.98 / 21.18
My current Sep 21 contract would be closed at price 18.73 and a new Oct 21 contract opened at 21.18 resulting in a loss/fee of £122.50.
Thanks again for your assistance.
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Hi,
I'm new to the forums and I'm looking for some assistance in calculating the charges applied to a trade depending on if it was placed on CASH market vs Futures.
The market I'm looking at is the VIX Volatility Index. My understanding is that Futures markets do not incur an overnight charge as this is build into the spread.
Can some one assist in calculating a charge for both Overnight vs Futures on the VIX?Overnight
Say the VIX is trading at £20.
We are putting our stake at £50 per point.Based on what I've read from the link below, the formula should be:
https://www.ig.com/uk/help-and-support/spread-betting-and-cfds/fees-and-charges/why-is-overnight-funding-charged-and-how-is-it-calculated-
In this instance (Assuming a LIBOR rate of 0.48% to keep it in line with the article above) :
=50*20*(2.5+0.48)/365Am I correct in saying this should be 0.08 so £0.08 overnight charge for the price/£ per Point above?
This seemed reasonable until I read this post here where he was being charged ~£100 per night where as my calculations show it should have been ~£4:Futures
For the futures side of things, I based it on information from this page:
https://www.ig.com/uk/help-and-support/spread-betting-and-cfds/fees-and-charges/what-are-igs-indices-spread-bet-product-detailsThe spread shows as 0.1 which using the same Price of £20 and £ per point of £50 works out at £5
The charges for the overnight seem somewhat excessive compared to the futures which make my think my calculations are incorrect.
My goal is to determine at which point, the futures market is more suitable depending on how long I hold my trade.
Any help is appreciated. If anyone is aware of any kind of calculator that already does this, let me know - I couldn't find any surprisingly.Thanks.
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Also did not get charged. Like Vision, I was only using it on my Demo account.
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FYI, I wasn't charged at the end of May 2020 (I signed up on 7th May 2020).
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On 14/05/2020 at 12:25, Spook1304 said:
Thanks, that makes sense. One of the main things that seems to be different from everything I've read and watched is selling PUTs and CALLs.
Everything I've read says when you sell one of these you actually GET the premium and hope the option expires worthless but that doesn't seem to be the case on the IG CFD or Spreadbet account.
Regardless if I buy or sell, it seems I always need to pay the premium.I've not been able to find anything that explains this very well as everything I can find says if you SELL (are the writer) then you should receive the premium.
I found my answer in this thread:
https://community.ig.com/forums/topic/8533-selling-options/?tab=comments#comment-46861
Looks like you get the premium but not until expiry. -
3 hours ago, andysinclair said:
You need to take into account the premium you have paid.
For example if you bought the put at say 30 then you would need to the index to close below 2830 to make a profit (strike 2860 minus 30 premium).
Thanks, that makes sense. One of the main things that seems to be different from everything I've read and watched is selling PUTs and CALLs.
Everything I've read says when you sell one of these you actually GET the premium and hope the option expires worthless but that doesn't seem to be the case on the IG CFD or Spreadbet account.
Regardless if I buy or sell, it seems I always need to pay the premium.I've not been able to find anything that explains this very well as everything I can find says if you SELL (are the writer) then you should receive the premium.
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On 12/05/2020 at 13:29, Guest shaggly said:
As you have shown you paid 50.7 for one option and 60.4 for the other in 50p per point therefore the premium you paid was 25.35 and 30.20 . If the market settles at 10890 then your total loss would be 55.55 ie what you have paid for the options which expire worthless . Your breakeven levels need to cover both the premium paid for the PUT and the CALL so 111.10 points therefore 11001.10 / 10778.90 . Outside these ranges you make 50p per 1 point move . Inside this range and you will be losing .
Thanks for your reply. It really cleared things up.One thing I'm still confused about is why the trades appear the way they do.
For example, US500 is currently at 2823.63.I BUY a PUT with a strike price of 2860 with a daily expiry.
My understanding is that if at the end of the day, the US500 index is less than my strike price of 2860 then I should be in profit. Why does my account show a loss:
(This screenshot was taken right after I bought the option).
Thanks again for your help.
What price do the futures contracts expire at?
in IG Trading Support - Dealing Questions
Posted
Would you be able to provide the undated value and the underlying for that time? What underlying is it that the undated market tracks?
From the platform, the closing price for the undated (at 4pm UK time on 10th Nov) was 797.7:
Do I have the wrong prices/times or was there still a 15.05 point basis between undated and the Nov 23 future?