FBMKLCI-C9P ~ Highly Speculative Call Warrant

Publish date: Mon, 08 Feb 2021, 08:29 PM
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I used 13 steps binomial model as there will be 13 trading days before expiry.

Fair Value is RM0.0297.



As it is 13 steps, there are 14 points of binomial distribution.



The binomial distribution can also be presented by S-curve.

From S-curve we can get one important info.

The strike is 1600, the chance that FBMKLCI-C9P end-up total loss is 74%.

However, the remaining 26% chance give us good return.

That give us the fair value is RM0.0297.


I bought some FBMKLCI-C9P this morning at RM0.030, and immediately short FKLI at 1585.0.

The correct ratio should be 1 contract FKLI to 77000 units FBMKLCI-C9P.

However, the correct ratio will change when the FKLI move up or down.

Very important, must say 3 times, speculate at your own risk, speculate at your own risk, speculate at your own risk.

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