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You will have to 'pay' the RIO rights out of your CFD acct.
So its a hedge at best. Lots of slippage at worst
So its a hedge at best. Lots of slippage at worst
Quick question. Just wanted to make sure I get it right before doing anything:
Based on 40:21 raio
080 shares = 42 new shares (my entitlement)
115 shares = 42 new shares (my entitlement)
120 shares = 63 new shares (my entitlement)
125 shares = 63 new shares (my entitlement)
Based on 40:21 raio
080 shares = 42 new shares (my entitlement)
115 shares = 42 new shares (my entitlement)
120 shares = 63 new shares (my entitlement)
125 shares = 63 new shares (my entitlement)
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40 shares = 21 new entitlement
20 shares = 10 new entitlement (part shares rounded down).
115 shares = 60 new
125 shares = 65 new
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Short RIO
Hi
would I be right in saying that we should all be shorting RIO? its going to come down after 16th yeah?
Hi
would I be right in saying that we should all be shorting RIO? its going to come down after 16th yeah?
Re: Short RIO
I'm no expert on shorting but given that you have to borrow shares to short a stock, I'd have thought that you'd have to account to the holder for the " cum issue" element when you buy back.
A lot will depend on the extent to which the ex issue price drops, but I wouldn't be hazarding a guess on that.
I'm no expert on shorting but given that you have to borrow shares to short a stock, I'd have thought that you'd have to account to the holder for the " cum issue" element when you buy back.
A lot will depend on the extent to which the ex issue price drops, but I wouldn't be hazarding a guess on that.
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Re: Short RIO
Based on today close price of RIO at 75.50, it equals to about $60.00 per share including benefit on right entitlement. Therefore, it is not a shocking event when RIO pull back below $60.00 after ex-right on the 17th of June. I am sure on how to trading short on RIO, but will this pull back have an impact on XAO index? Can we go short on XAO tomorrow.
Based on today close price of RIO at 75.50, it equals to about $60.00 per share including benefit on right entitlement. Therefore, it is not a shocking event when RIO pull back below $60.00 after ex-right on the 17th of June. I am sure on how to trading short on RIO, but will this pull back have an impact on XAO index? Can we go short on XAO tomorrow.
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Shorting RIO wont work, as the fall is factored into the price. If you're short you will have to pay the rights value to the lender.
Ex rights tomorrow should be $59.25
XAO value shouldn't be affected by RIO fall as its a rights issue. The fall in price is offset by the increase in no. of issued shares. ie. Market cap remains constant. (Of course RIO can rise or fall on top of that from overnight leads etc)
Ex rights tomorrow should be $59.25
XAO value shouldn't be affected by RIO fall as its a rights issue. The fall in price is offset by the increase in no. of issued shares. ie. Market cap remains constant. (Of course RIO can rise or fall on top of that from overnight leads etc)
I have contacted my broker. They said if I bought tomorrow (16th June 2009) I still entitle for the right issue.
but 17th will be ex-right date, which mean tomorrow is the last day to buy RIO for the right issue.
That's what my broker confirm with me. but I would strongly suggest you confirm with your broker. sometimes rule differ with different brokers.
Sean K
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This is all just profit taking. The 'news' that caused the US to come off was no worse than any other news the past few weeks. Crikey, when GM went officially bankrupt it went up 2%. So, the market has simply overextended for the minute and people who have made some nice profits are cashing in. Those that run the hardest, will fall the hardest. RIO has had a pretty bloody good run. 
Why sell up and take profit today when you can be entitled to the very cheap offer if you hold for one day longer? I guess everyone has their strategy.
One other thing I want to ask - the market depth shows more buyers (many more) then sellers (buyers 1231 to sellers 466). Shouldn't this imply an increase in price when demand outweighs supply.
One other thing I want to ask - the market depth shows more buyers (many more) then sellers (buyers 1231 to sellers 466). Shouldn't this imply an increase in price when demand outweighs supply.
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Because then rio shares will fall tomorrow to price in the cheap rights, just depends on overnight action really.
Those buyers could be clustered around $30 and have no intention of moving, or they could be tiny retail buyers and all the sellers are big sellers etc. Many different factors can affect that.
For current RIO share holders, if we choose to sell the rights, from tomorrow, what happens to the value of our current shares if we bought previously at, say $65.00? Selling the rights would provide cash profit but what happens to the price of the shares already bought at $65? Are these prior shares listed from 17th June at the new post-rights price in which case how is a cash profit made for the rights, or do the prior bought shares continue to sell at the current price until the 24th June?
I do wish RIO had released detailed info on this as all these questions may not have been necessary (perhaps).
Paul
I do wish RIO had released detailed info on this as all these questions may not have been necessary (perhaps).
Paul
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What you bought the RIO shares for doesnt matter. They will trade where-ever the market deems them to trade. (prob around the $56 TERP mark)
RIO ordinary shares will change from cum rights to ex-rights tomorrow.
Basically there should be no portfolio gain or loss. The loss from the fall in RIO price should be made up by selling the rights on market.
RIO ordinary shares will change from cum rights to ex-rights tomorrow.
Basically there should be no portfolio gain or loss. The loss from the fall in RIO price should be made up by selling the rights on market.
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Anyone care to guess how much those rights will be selling for? Around $30 with a further $28 to pay???
