It is 5:16 AM 25/03/2009

Okay so for the second prospect situation is worse. I did not try to buy 2500 or 3750.10 (the remaining "paper" cash amount) because I thought they will have low size limit for this also. I straight away tried to buy 1250 GBP worth of
R331 (Tesco Call 2009/09 4.00). That did not go through. In fact for R331 maximum size is not available. Anyways for this also we will assume that I will pay the offer price as shown below:

Bid Price BPC 19
Offer Price BPC 20
Maximum Size* N/A
Deal Quantity 3,062
Deal Value £ 624.90

So ... our new paper portfolio now has:

2690 shares of R203
3062 shares of R331
3125.2 in cash

and we will follow their worth during the day. I guess next step is to set profit targets and also set a limit on loss that we will take before we liquidate at a loss. I am at a loss as to how one can rationally decide these 2 price levels. One thing that has happened immediately after these buys si I suffered 2 losses already. One loss is that of 12.50 GBP commission fee. Another is that of bid-offer difference. For example, R203 had bid and offer prices as follows:

Bid Price BPC 45
Offer Price BPC 46

That means if I had simultaneously bought and sold I would have bought at 46 BPC and sold at 45 BPC. So 2690 shares would have got me at 45 BPC: 1210.5 GBP. And minus commission of 12.50 GBP I would have got 1198 GBP. So my investment of 1249.90 GBP would have suffered a loss of 4.15%.