simon---almost 99% sure Bankers are fighting Call Warrant losses. First 3 months of 2021 will see massive call warrant loss. However Bankers are not stupid, they Cut loss by Buying mother BAT next 2 weeks
It's not a straight line for the banks too. They are not just sitting there just to lose their pants on CW. They are the market maker and trading it themselves
JJChan, bankers don't cut loss by buying mother BAT next 2 weeks. When they buy, it will increase the price of both BAT and the CWs and they lose more money.
They will sell or sell short BAT before expiry of CW to bring down the cash settlement payments. Trading volume of BAT is not high, so its easy to manipulate the price.
Simon, stay clear from CWs with less than 2 months to expiry unless you are confident the mother will increase by at least 10%. Anyway BAT has gone up 35% since the issuance of C1, so the upside may be limited.
apprentice, You are right and wrong. Bank are not carrying One call warrant only(bat). Diversification---many call warrants. When One is too bullish they Cut- and let Go. Yearly Bank Bonus comes when Portfolio manager makes money for the Bank Or Not. Really donT care which warrant concerned
I have many Head Butts with Call warrant previously. I found that if their losses is more than 10% they wonT enter into a serious fight. But the real problem is Bankers help each other in Call warrant fight when expiry Date is one after another ( One Month time frame) They grouped together and attack the first in line (expired soonest) so that next in line will be saved
In any way i see Bankers loading Up next 2 --3 weeks until it is overbought, then they will plunge the price 2 weeks before expiry Date. However if foreign Fund started Buying, there is nothing Bankers can do but just sell Mother to reduce warrant losses ( like TopGlove Now)
JJ, I respect and value your opinion. BAT is already overbought as I see it. From below than rm10 to over rm14 in 2 months is fast. IBs would have collected BAT from before they issue CWs until now.
CWs are like dragons. Riding them when they are small, little dragons. At 30 sens, its quite matured and rather expensive and can burn the purchaser badly especially those close to maturity.
One has to do lots of homework before punting CW. But the risk is truly rewarding if one gets it right.
around 38--40, BAT is overbought. However I donT know to draw the line between Overbought Or underbought when my Banker told me there are 400 billion (ringgit ) of HOT money parking in HK and Singapore ready for action. Just like TopGlove, when local Bankers said TP 15, foreign Funds said TP 80. 400Bil just represent 6-7% of Hedge Fund money in Dow Jones---I consider DW jones as fully valued and this Hot USA money got to earn money somewhere
BTW, the price is based on 5 day weighted average prior to expiry.
Expiry 29 Jan Friday, calculation will start from 22 Jan.
The last 2 days before expiry, the C1 will be suspended. You are at the mercy of the IB. Should they sell BAT and bring down the price by rm1 during the 5 days, they would have saved 10sen you get 5K less.
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Posted by Alex™ > 2020-12-19 09:33 | Report Abuse
buy now, 20 dump