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Traders Forum: Cape Town

Traders Forum: Cape Town. Shaun van den Berg Head of Client Education Wednesday, 21 st August 2013 18h00 until 20h00. Agenda. Technical Market Overview Trading Equity Derivatives Single Stock Futures (SSF) ALSI & ALMI Index Futures Contracts For Difference (CFD)

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Traders Forum: Cape Town

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  1. Traders Forum: Cape Town Shaun van den Berg Head of Client Education Wednesday, 21st August 2013 18h00 until 20h00

  2. Agenda • Technical Market Overview • Trading Equity Derivatives • Single Stock Futures (SSF) • ALSI & ALMI Index Futures • Contracts For Difference (CFD) • The Stockbroker (Trade Ideas) • The Investor (Long-term Investment Opportunities) • Upcoming Webinars / Traders Forums • Open the Floor • Summary & Conclusion

  3. Technical Market Overview • S&P 500 Index • Hang Seng Index • Nikkei Index • DAX Index • FTSE 100 Index

  4. S & P 500 (Weekly) Resistance Resistance Resistance Support Support Bullish

  5. Hang Seng Index (Weekly) Resistance Support Bullish

  6. Nikkei Index (Weekly) Resistance Resistance Support Bullish

  7. DAX Index (Weekly) Resistance Resistance Support Bullish

  8. FT 100 Index (Weekly) Resistance Support Bullish

  9. Major International Markets • S&P 500 Index • Bullish, Overbought, moving towards support • Hang Seng Index • Bullish, moving towards resistance (triangle) • Nikkei Index • Bullish, techs pointing lower, testing support • DAX Index • Bullish, moving upwards within up channel • FTSE 100 Index • Bullish, mixed techs, lower cyclical high

  10. Technical Market Overview • Brent Crude Oil • Gold $ • Platinum $ • Euro / US $ • Rand $

  11. Brent Crude Oil (Daily) Resistance Support Support Bearish (But turning!)

  12. Gold $ Support Resistance Resistance Support Bearish

  13. Platinum $ Resistance Resistance Support Support Bearish (But turning!)

  14. Euro/ USD Resistance USD stronger / EUR weaker Support USD weaker / EUR stronger USD Weakness

  15. Rand $ ZAR stronger / USD weaker Resistance ZAR weaker / USD stronger ZAR Weakness

  16. Major Commodities & Currencies • Brent Crude Oil • Bearish, Overbought, testing resistance • Gold $ • Bearish, moving higher & returning to up channel • Platinum $ • Bearish, Overbought, move to lower support • Euro / US $ • USD weakness, testing support of triangle • Rand $ • ZAR weakness, trading within down channel

  17. Technical Market Overview • JSE Top 40 Index • JSE Resources 20 Index • JSE Gold Mining Index • JSE Platinum Mining Index • JSE FINDI 30 Index

  18. JSE Top 40 Index (Weekly) Resistance Support Bullish

  19. JSE Resources 10 Index Resistance Resistance Support Bearish (But turning!)

  20. JSE Gold Mining Index Resistance Support Support Bearish

  21. JSE Platinum Mining Index Resistance Support Resistance Support Bearish (But turning!)

  22. JSE FINDI 30 Index Resistance Support Bullish

  23. Local Market • JSE Top 40 Index • Bullish, nearing Overbought, testing upper resistance • JSE Resources 20 Index • Bearish, Overbought, trading within narrow up channel • JSE Gold Mining Index • Bearish, broken resistance, techs point higher • JSE Platinum Mining Index • Bearish but turning, Overbought • JSE FINDI 30 Index • Bullish, Overbought, sideways in short term

  24. Summary: Technical Overview • International Markets • Bullish • Commodities • Bearish • Currencies • USD weakness • Local Market • Mining - Bearish but turning • FINDI – Bullish but overbought

  25. Value Investors • Lewis (LEW) • Transpaco (TPC) • Value (VLE) • Bowcalf (BCF)

  26. Undervalued, Quality shares with dividends

  27. Undervalued, Quality shares with dividends: Lewis (LEW) PEG = 55 DY= 8.56%

  28. Undervalued, Quality shares & dividends: Trnpaco (TPC) PEG = 60 DY= 5.06%

  29. Undervalued, Quality shares & dividends: Value (VLE) PEG = 70 DY= 3.87%

  30. Undervalued, Quality shares & dividends: Bowcalf (BCF)

  31. Traders Forum Investor / Trader Matrix Trading Tools

  32. Investor / Trader Matrix Prudent High Reward / Low Risk Aggressive High Reward / High Risk High R EWARD Conservative Low Reward / Low Risk Speculative Low Reward / High Risk Low Low High RISK

  33. Trading Tools • Watch List (Top 100 shares) / Fundamentals • Top 40 shares / Mid cap shares • Mining & Resources / Financials / Industrials • Rand-Hedges?

  34. Watch Lists

  35. Watch Lists – View as Investor

  36. Trading Tools • Watch List (Top 100 shares) / Fundamentals • Top 40 shares / Mid cap shares • Mining & Resources / Financials / Industrials • Rand-Hedges? • Charting Software / Technical Analysis • Price charts (Candlesticks) / 50 & 200-day MA • Trend lines / Support & Resistance • Fibonacci retracement levels • Chart Patterns • Stochastic & RSI indicators / Volume Indicators • Risk & Money Management • Stoploss • Position Size

  37. Trading Equity Derivatives - Single Stock Futures (SSF) What are Single Stock Futures (SSF)? Comparable to Equities Trading Costs Dividend Neutral Contracts Hedging using SSF Pro’s & Con’s of Trading SSFs

  38. Equity SSF • Regulated by the JSE • A standardised contract • Standard quantity (100 shares) • Expiry Date • Expires on the third Thursday of every quarter • March, June, September & December. • Initial Margin – ± 15% deposit • Gearing ± 6 times • Variation Margin – Adverse price movement

  39. SSF Trading Costs • Brokerage - Charged at 0.4% (ex VAT) - Value of the transaction. • Market Makers Fee – Charged at 0.1% (excluding VAT). • The total brokerage charge is 0.57% (including VAT). • Booking Fee - R60 is charged per SSF contract • You pay only for the opening leg of all transactions • Only once per day per SSF contract. • If you buy a Sasol SSF10 times on one day; you only pay R60 once. • Rollover Cost – 0.25% of Exposure • Interest Payable • Interest paid on the SSF cost value • Determined daily by the market maker • Ruling SAFEX rates. • Interest Received • Initial Margin – SAFEX less 2% • Cash balances - Rate linked to the JSE Trustees rate

  40. Comparable to Equities INVESTOR A (Share Trader) INVESTOR B (SSFs Trader) Confident that Sasol shares will increase. Confident that Sasol shares will increase. Sasol’s share price is R350,therefore she buys 1 contract. She has R35 000 which she can invest. Sasol’s share price is R350,therefore she buys 100 shares. The initial margin set by the broker is R6 000 which is paid by the buyer. 3 months later the price has increased by 10% so she sells her shares to make a R3 500 profit. After 3 months the price has increased by 10% & the investor closes out his position & sells out of theSasol SSF contract. Her return on her investment is 10%. His profit is R3 500but his return on his investment is 58%.

  41. Dividend Neutral Contracts • Dividendsexpected in any quarter • Priced into SSFs • Includes expected interest to be received on dividend payment. • Traders do not receive dividends as a cash payment even though they do benefit from them. • Long Trades • N-contract = R100 • Q-contract = R95 plus interest • Plus F-Contract = R5 • Short Trades • N-contract = R100 • Q-contract = R95 plus interest • Less F-Contract = R5 Dividend R5 SSF Price R95

  42. Naspers R200

  43. Hedging using SSF Equity Position + 500 NPN SSF Position -5 NPN contracts Share Price: -R200 Share Price: -R200 Loss: 500 x R200 = -R100 000 Profit: 500 x R200 = +R100 000

  44. Pro’s & Con’s of Trading SSFs Advantages Disadvantages • Interest Payable • Quarterly Rolling Fee • Dividend Neutral • No voting rights • Gearing & Risk • Capital Efficient • Low trading costs • Hedge your current portfolio • Trading Platform • DMA • After hours • Stops

  45. ALSI Index Future • ALSI futures are a futures contract based on the Top 40 index • Go Long - Buy the index & Sell later (Make money as prices rise). • Go Short - Sell the index & Buy back later (Falling prices). • High liquidity – Very popular • Cheap – R25 (including VAT) per ALSI index futures contract traded. • No booking fee. • Tight spreads – The difference between bids & offers are narrow. • Every index point is worth R10 (100 point move = R1 000 profit or loss) • Initial Margin • Trade at the index price • Pay an initial margin as set per SAFEX plus the PSG Online variation margin (currently R29 250) • Profits or Losses - Depends on where you exit trade based on the R10 per point value. • Expiry Date – No rollover (Closeout)

  46. ALSI Index Future ±200 Points

  47. ALMI Index Future • Mini version of the ALSI futures (10%) • Liquidity – Improving • Spreads - Improving • Market Maker - As there is a market maker this index will track the ALSI futures. • Every index point is worth R1 • Initial Margin required is a tenth of the ALSI futures margin = R2 925 • R5 (including VAT) is charged per ALMI contract traded. • No booking fee • Expiry Date – No rollover (Closeout)

  48. Trading Equity Derivatives - Contracts for Difference (CFD) What are CFDs? Trading Costs CFD versus Equities Trading CFD Pro’s & Con’s of Trading CFDs

  49. What are CFDs? • Contracts for difference (CFDs) are contracts … • Two parties (i.e. client & PSG Online) • Settled at the close of the contract • Difference between opening & closing price. • Derivative - It derives its value on an underlying share e.g. ANG, BIL, SOL • “Go Long & Short” – Up or down • “Long Only” – No Scrip available for shorting • Top 100 JSE listed shares • Initial Margin • 15% on Top 40 • 17.5% on next 60 • Variation Margin – “Top-up” - Adverse price movement

  50. Trading Costs • Minimum Cost Value - Each new CFD position opened needs to have a minimum cost value of R25 000 • R3 750 (15%) initial margin on a Top 40 shares • R4 375 (17.5%) initial margin for Top 41-100 shares. • Brokerage – Commission is 0.4% (excluding VAT). • Open to negotiate brokerage rates for large, active traders. • Interest – Interest is charged on the total value of the open position at SAFEX +2%. • This is usually equal to around Prime -2%. • Scrip Lending Fee • A fee of 1.5% per annum is charged for short positions • Charged per day on open positions • Minimum of R250 per position. • Financing at competitive rates (CFD) • Current borrowing rate 6.50% (± Prime –2%)

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