Posted by kcchongnz > 2012-11-01 14:10 | Report Abuse

Say I am bullish about Tenaga and want to make RM12,000 from Tenaga. I would have to take out RM80,000 to buy 11430 shares of Tenaga at the present price of RM7.00. When Tenaga rises to Kenanga's target price of RM8.05, I will make the amount I want [(8.05-7.00)*11430=12,000]. However I am not too brave to come out with RM80,000. What if Kenanga is wrong in its analysis? What if Tenaga, instead of rising RM1.05, it drops by RM2.00? I would lose RM23,000! That is too much for me to risk. Now instead of buying 11430 shares of Tenaga, I come out with RM9000 to buy 100,000 shares of Tenaga call warrant CW at 9 sen. If Tenaga really rises up to RM8.05 before its expiry on 29/3/2013, I make the required RM12,000. If Tenaga rises more than RM8.05, I would make much more. If I am unlucky and Tenaga price doesn't go up, the most I lose is my capital of RM9000 only. Tenaga CW with an exercise price of RM7.00, exercise ratio of 5, has 5 more months to expire. It has a good gearing of 15.6 or an effective leverage of 9 is a good punt. Below is the payoff of CW at various prices of Tenaga.
Tenaga 7.00 7.20 7.48 7.80 8.05 9.00
Gain 0% 3% 7% 11% 15% 29%
CW gain -100% -56% 7% 78% 133% 344%

Posted by stock5678 > 2012-11-01 14:19 | Report Abuse

Tenage doesn't has tenage. ya, forget, tenage is in my "never pay a cent to buy" list too

Posted by kl foong > 2012-11-01 20:51 | Report Abuse

Tenaga is for long term. If you have no patience and no holding power. Stay away.