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Sunday, 21 February 2021

My Alphabet long trade

With a long term interest in space (came home from school to watch the first moon landing in '69, and recently did a Masters in astrophysics for a bit of fun) I've been watching the recent SpaceX test launches of SN8 and SN9 with much interest (and the NASA landing of Perserverance on Mars was also cool). Unfortunately SpaceX is still an unlisted private company, so you can't buy SpaceX shares directly. If they were available pre-IPO I'd invest a few thousand dollars for a bit of fun (I invested $5,000 in a pre-IPO internet stock GEN just before the dot.com bubble, but it went broke before it got to IPO stage).

Apparently employees of SpaceX get some stock, but getting a job at SpaceX isn't an avenue open to most of us. One US investment fund (Baron Focused Growth Fund - BFGFX) has a small investment (2.7% of its capital) in SpaceX, but that fund is only available to US investors and isn't listed in my City Index CFD trading account. So the only avenue available for me to (possibly) get some exposure to SpaceX seems to be an investment in Alphabet, which invested $900 million USD in SpaceX in 2015, but it is unclear what percentage of SpaceX shares are currently held by Alphabet.

Alphabet shares have also been increasing strongly in price during 2020, so I took a punt and placed on order to buy 5 Alphabet A CFDs at $2,087.50. I'm not sure exactly how much that will cost (if the order is filled when the market opens), but I think the required margin for US stock CFDs is 0.5% on City Index, so it might cost $52.20 or thereabouts. Since a large jump in stock price on 4 Feb it has been trading above $2,035 so a drop back to that level would cost me $250. I'd probably close out the position if it drops below that level, but I haven't placed a stop loss on the order yet - I'll wait and see if the order gets filled on Tuesday night (my time zone) and what sort of intraday volatility is 'normal'. 10 points intraday seems fairly typical on the ATR chart, but there is often much larger gapping overnight.

This is pure speculation/gambling for a bit of fun. If I limit my maximum loss to $250 it won't be any more costly than eating out at a restaurant or going to see a concert or a show would cost.

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