8:30 AM 26/03/2009

Yesterday we had 3125.2 GBP in cash in our paper trading account. And we had 2690 shares of R203 and 3062 shares of R331. Today both have gone south. Yesterday itself I knew that they have not performed well. And I could have liquidated them yesterday before market close and avoided huge slump they showed today. Anyways I will go ahead and assume they were sold today at a loss. Following is the bid/ask data from my brokerage. First line is the line my software generates. I will explain all the numbers later. All calculations are at the end of post. There is one small change from today's pick list. One pick is less. The last number is generated by my software. It is indicative of profit potential. For of one pick (BP, Put, 2009/09, 6.00, R283) this is negative. So for R283 profit potential is negative. Please note that another BP Put warrant has small positive number. But we will still buy it. Another surprise was that "Maximum Size" numbers were N/A for most of picks. So we will cancel the plan to not to invest when this number is too low or N/A.

Bid-Ask Data (with my software's "pick" lines):


BP Call 2009/09 5.00 R203 4.70 +4.37 2.3 +0.03
Bid Price BPC 45
Offer Price BPC 46

Tesco Call 2009/09 4.00 R331 3.30 +3.79 5.6 +0.15
Bid Price BPC 17
Offer Price BPC 18

Barclays Call 2009/09 1.50 R266 1.30 +1.97 2.7 +16.35
Bid Price BPC 36
Offer Price BPC 37
Maximum Size* N/A

Tesco Put 2009/09 4.00 R337 3.30 -2.84 1.1 +1.13
Bid Price BPC 91
Offer Price BPC 92
Maximum Size* N/A

Lloyds Call 2009/09 1.00 R321 0.66 +1.68 6.3 +15.97
Bid Price BPC 15
Offer Price BPC 16
Maximum Size* N/A

BP Put 2009/09 5.00 R206 4.80 -3.27 1.2 +0.01
Bid Price BPC 83
Offer Price BPC 84
Maximum Size* N/A

BP Put 2009/09 6.00 R283 4.80 -2.67 0.7 -0.00

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Calculations:

3125.2 cash

Sold 2690 shares of R203 at 45 BPC 2690*45/100 -12.5(commission) gives us: 1198 GBP

Sold 3062 shares of R331 at 17 BPC, gives us: 508.04 GBP

Total cash: 4831.24

Now our buys. We have 4 picks today. So we will just assume that we will buy equal monies of each. That is we invest 1207.81 in each share. Minus commission it is: 1195.31.

R266 3230 shares bought at 37 BPC cost us 1207.6 GBP
R337 1299 shares bought at 92 BPC cost us 1207.58 GBP
R321 7470 shares bought at 16 BPC cost us 1207.7 GBP
R206 1422 shares bought at 84 BPC cost us 1206.98 GBP
1.38 in cash

Yesterday I had gone to the extent of finding out pemitted size but today I found all size numbers marked as N/A. So I just did not try to insert a live trade. Another reason is fear that I might accidentally complete the trade. That is, I might click on OK in final screen. Today I looked up bid-ask prices by issuing limit orders as an added measure of safety against such mishap.

Yesterday I had avoided looking at the issue of what might be our profit expectation and what could be stop loss level (at which sell at a loss to avoid further loss). Frankly today also I do not know. I was thinking about letting this exercise give us some guidance as we go along. If that is so then why even try to run a portfolio? Why not just invest 1000 GBP and see how much maximum we would be making. This we do in "Phase I" of study and then use maximum possible profit numbers of Phase I to guide us in Phase II which will have profit bookig as well as Stop Loss levels. For now I am contnuing the way it was started. But I may abondon this and start 2 phase study in future.