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Online Share Trading

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help on ssf

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Not applicable
can some one please help me out here.if you buy a ssf for R100 ,the end of day its 102 and you let it roll over 4 next day and the ssf opens at 110 and closes 105 do u make a loss of R3 OVER THE 2 DAYS OR A PROFIT OF R8?thanx
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15 REPLIES 15
BAP
Regular Contributor
Looks like R5 profit to me but your example is very simplistic. Simon - the quote on SSF's daily p&l as well as the total profit and loss is based on the best bid price between 09H00 and 17h00, but that is adjusted to last MTM price after closing and total P&L adjusted accordingly - is that correct?
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HateGauteng
Super Contributor
SSFs trade on the value of the underlying share not on the value of the SSF itself. I suggest attending the course or looking at the online stuff before dealing with SSFs.
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Not applicable
bap,hategauteng i understand all ur saying.im asking if ur original buy price is still relevant for the second day of trade or do they use the opening price of the second day as the "new buy price"
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BAP
Regular Contributor
Hond, original SSF buy price always remain part of the equation and remains unchanged. Total profit and loss will be based on that, whilst dayly p&l are based on the relevant closing prices per day (MTM). Or so I think...
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SimonPB
Valued Contributor
profit or loss is credited every day .. so after day one you get your profit or loss .. then day two starts afresh from the mtm of day one ..
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jack12
Super Contributor
I think your answer is, your prof/loss is calculated and paid daily. So in effect your bank balance is 200 up on day 1, but the next day the calc is from the MTM (ie 102) so the next day you open at 202 and show 0 profit the price rises to 210, the falls closing at 206. profit is 400 (paid into your balance) The next day opens at 206 and falls to 204 at the close your account is debited -200 loss.
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Not applicable
sjoe! thanx a lot guys. cleared up a lot of things. so no point realy to roll over to next day except if you think the stock is not going to go under the opening price anytime during next day (if you are long)to give u a dip to buy cheaper
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BAP
Regular Contributor
Simon - apologies if stupid question but is the closing MTM which is cricial for determining daily P&L's based on the last actual transaction or the average between all bids and offers (or in a different manner)?
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Not applicable
good question!
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BAP
Regular Contributor
Except for the spelling of "critical".
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DA
Contributor
It's always good to understand the underlying calculations and theory. However, we tend to make things too complicated and my layman's way of looking at it is as follows: 1. you buy an SSF at a share price of R100-00, ie the underlying price. 2. It actually "costs" you the SSF price (which takes account of interest etc for the company providing the SSF). Say the SSF price is R101-40. 3. You decide you want to make R2-00 profit. You therefore need to sell it at an SSF price of R103-40. 4. You then need to check what the underlying price would be to achieve an SSF price of R103-40. Say this is R103-90. 5. You then put in your sell order at an underlying price of R103-90. So, to make a R2-00 profit, you effectively buy at R100 and sell at R103-90. This example ignores the brokerage costs of R68-40 (paid twice, ie when buying and when selling, so you need to factor that into your desired profit, which will also be affected by how many contracts you buy, ie the R68-40 is fixed per transaction, so the more contracts you buy the more irrelevant the fees become). 6. You need to be aware that the SSF price changes from time to time, so to achieve your R2-00 profit you may need to change your selling price of R103-90. So, what one needs to appreciate, as per the example above, is that the share price must generally go up a lot more than the amount of profit you are targeting. Trust this simplistic explanation helps!
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Not applicable
thanx DA me make sense now! can you clear up the previous question about staying in a trade till next day?
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Not applicable
its tricky hond.....
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DA
Contributor
The question about staying in a trade overnight is essentially irrelevant per my simplistic explanation. You are simply waiting for the underlying price to get to your desireed amount, whether this happens the same day or takes a month. You just need to be aware of the SSF price changing, and obviously this is dependant on what is happening on the market, whether the trend is changing etc. I haven't studied the extent of changes in much detail, but if it does change and goes against you significantly, then you modify your expectations on profit, eg maybe go for R1-00 profit in the example, or maybe even close it out if it is heading towards your stop loss. But clearly you are also staying aware of what is happening on the market, eg the example of looking for the R2-00 profit may just be a guide - if you think the marlet is running well you may then hold out for a much higher profit, the main point that I wanted to highlight was the fact that there are significant "costs" in addition to the R68-40 fee, so a price rise in the share price doesn't necessarily mean you are already in profit. Note that the costs are different for different shares, and differ depending on how the market is expected to move (that's why they are "futures"...)
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SimonPB
Valued Contributor
because we do live intra-day profit/loss .. mtm not that important .. it is based on safex calc using 5pm closing, or bid/off or vwap is not 5pm close .. remembering the price will include interest and any dividend assumptions ..
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