Trading Analysis - 19th Oct 2018


19 October 2018

12 noon

Buying volume currently outweighs Selling by a factor of 2-to-1, yet the SP moves down. No doubt there will be some delayed trades to throw into this mix later - specifically at around a quarter past eleven.

The Markers Makers (or perhaps only one of them) has now built a short position of around 5M in size. In order to close this short at a profit they need to pick these shares at significantly below 27.5p. If they are able to move the price down to such a level they also have to hope that they have enough people willing to sell to them at this point. 

It looks increasingly unlikely that they will pick up many shares from PIs this way - they have to hope that they can do this via warrants or someone like First Island. Given the behaviour in the previous few days - being forced to double-up on their short - it does not look like this is a done deal. Thus what PI buyers do now, and in the coming 2 weeks, is relevant to the end result.

420,000 more Buys than Sells at noon.

End of Day

Delayed reports of trades did not really change the outlook on the morning session. However 2x250K significant sells (1 shown immediately, the other delayed) did appear to have a major impact on the afternoon's trading, knocking the MMs nett trade position back close to neutrality.

At this point in time there is no repeat of the end-day-trade pairing that we saw during the post-Sojitz period. We ascribed those duplicated-pairs to a First Island part selldown being being taken by MM1 and then transferred to MM2 to fill the c. 6M short that was evidently opened during the strike. It appears that only sufficient 250K's have been taken on this occasion to balance the excess of Buys - the nett MMs short position is not impacted - thus we would not expect to see Inter-MM transfers at this stage.

The increased size of MMs short exposure remains constant and at almost precisely twice the previous level:


Haha I spoke to soon. First end day duplicated trade now reported - we may assume that this is 250K from First Island going to MM1 then being transferred to MM2 to try and reduce their short exposure. 

Trouble is even if both 250Ks today are like that it still doesn't start to reduce the size of their short yet (I've already counted the 2x250K as sells)- there's just too many buys today - the graph above remains accurate.

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