Posted by Mat Cendana > 2012-07-16 11:59 | Report Abuse

I don't fully understand warrants, so I feel this one is a bit `strange'. I've checked with The Edge about this one (BIMB-HA):

Exercise Price: 2.39 (BIMB is now 3.22; -HA at 0.055)
Expiry date: 8/3/2013
Exercise Ratio (x): 3
Premium: (19.18%)
Gearing: 17.67 (I don't understand this one).

Does this mean that: (1) the warrant holder is entitled to purchase BIMB shares at 2.39? (2) one needs 3 warrants to buy 1 BIMB mother share?

If these are correct, then it means one can get BIMB shares at a discount(?) Or is there something about warrants that I've gotten wrong?

Posted by Namoyaki Takarajima > 2012-07-16 12:09 | Report Abuse

GOOD Subject Bro Mat. To all bro/sis, please discuss this matter. 'Warrants: Racing with the bank by the bank'.

Posted by Mat Cendana > 2012-07-16 12:14 | Report Abuse

Yes, I hope people who are more knowledgeable can help enlighten us about the workings of warrants... including this one because there *appears* to be a chance to make some money based on this seeming `market anomaly'.

Posted by kl foong > 2012-07-16 12:25 | Report Abuse

My understanding on the conversion:-
3 cw + RM 2.39 for one BIMB share before expiry date.
(hope i m not wrong)

Posted by Vel . > 2012-07-16 12:25 | Report Abuse

No Mat Cendana, a warrant holder is NOT entitled to purchase BIMB shares. This is a put-warrant, similiar in characteristics of a call warrant e.g BIMB-CC, CD; But works on the opposite direction in terms of share price.

The article in The Edge Weekly dated 9th July, describe it as a call warrant. The Edge issued a correction in this week's issue (16th July).

But thanks to that article I sold mine, bought much earlier, at a 2 sen profit on the 9th July :) I will trade again.

I am a bit blur on the Gearing too, so dont use it in making my decision when buying/selling warrants.

Hope it helps.

Posted by CP TEH > 2012-07-16 12:37 | Report Abuse

Hi Namo and Cendana

Generally, I will advise all NOT to trade what we do not understand. And trading these structured warrants is DEFINITELY not advisable, seeing that many punters/gamblers around in this forum.

How do we see? These people talk about MTronic, Ingen(wa), Luster, AGlobal, Nicorp and the list goes on. It just shows gambling-mentality in play and some unscrupulous persons here could LURE them into the 'traps'.

Ok, I m going to share on surface, only for knowledge sharing purposes.

We are more familiar with LONG(buy lower, hope to sell higher). So, we have call-warrants which THEORITICALLY speaking moving in tandem with mommy-share. It is NOT always in that manner. Many CWs are NOT traded ... low liquidity and risk is very high as we have sharks lurking around.

Put-warrants is moving the OPPOSITE direction. We are betting on the mommy-share to move lower. At the moment, BIMB looking good and uptrending. So, we should not buy put-warrants attached to her!!

Put-warrants are NOT in play as we are NOT allowed to short-stocks(SELL high, BUYback lower) and majority in KLSE not familiar with such moevments. Hence, it could not attact punters into put-warrants.

Remember those bull-bear instruments they tried to introduce? It vanished from screens!!

Anyway, hope I do not confuse anyone further.

Just a strong advice to ALL reading here(especially so many newbies and novices ... oldtimers, we dont have to worry for them) ... DO NOT touch these warrants. Do not touch those penny-gambling stocks.

TEH

Posted by CP TEH > 2012-07-16 13:01 | Report Abuse

Hi again

I think I should explain the gearing in general, not the calculation tho.

The higher the gearing the riskier the instrument is. I will not go for call-warrants with gearing above 5, just fyi.

Cheers.

TEH

Posted by Mat Cendana > 2012-07-16 13:16 | Report Abuse

Vel and CP Teh: Thanks very much for the information. As I had suspected, these warrants and their individual mechanisms are are rather complicated. All this while I had thought everyone knows what he's doing, seeing some warrants do heavy volumes every day. Apparently, it's a real possibility that many don't really know what they are going into!

So, basically, when it comes to this particular BIMB warrant, the opposite will be `good' for the holder. If the mother BIMB share were to come down, then the HA's price will go up? In a way, this sounds like short-selling, as CP Teh had mentioned... which isn't a bad thing if one feels something is overpriced and wants to bet that it will go down.

Posted by CP TEH > 2012-07-16 15:30 | Report Abuse

Hi Mat Cendana

It is not as simple. The MAIN risk with put-warrants in KLSE is liquidity. We are at the mercy of the market marker.

Even if BIMB moving lower, I dont think so we should bet that Bimb-ha will shoot up.

I have studied call-warrants in detail before confidently trading on CWs. Believe me, it is not as easy as clicking buy-sell like MANY punters in markets. They WILL get burnt. That is how market works, sucking more greedier ignorants and they will ... leave market quietly.

Anyway, to be safe ... better than sorry.

Trade consistently with profits. With FA and TA behind us, we do not needs to gamble and taking such high risk. It is un-neccesary.

Just my pointers, as usual ... will fall to many deaf-ears here. Sigh.

TEH

Posted by Namoyaki Takarajima > 2012-07-16 15:35 | Report Abuse

Hear Hear.

Posted by Mat Cendana > 2012-07-16 20:26 | Report Abuse

Wise words from CP Teh. You are right in that it's better to play safe by buying only the counters that we `know' a lot more of. One might get lucky with warrants and come out with tidy profits. But I'm more of the `penakut' type who isn't daring. Better aim for smaller profits with counters that come with less risks.

By the way, thanks a lot, guys, for sharing your knowledge and insights. If only forums like this were around in the 1990's - I would have been a much better-informed investor/trader. But there was no internet then, of course, and we were flying blind most of the time. Nowadays, it's much easier to obtain information and pertinent insights and opinions. But more important, we must *use* these wisely.

Posted by kl foong > 2012-07-16 20:50 | Report Abuse

Warren Buffett -'Never invest in a business you cannot understand'

Posted by grss > 2012-07-17 19:06 | Report Abuse

Well, I personally bought this warrant @0.055. I agree that warrant is based on price movements of mother share, and in this case, HA moves up if BIMB goes down. The reason I bought is because I think BIMB may retreat to 3.00 after some minor profit taking. That's when I hope HA will go up. It is true that it still needs liquidity for that to happen. But I diversify the stocks in my portfolio in a way that I have strong fundamental stocks and some higher risk ones such as warrants. But I place less capital on the high risks stocks. Whether this HA burns my wallet or profit my wallet remains to be seen. Just my two cents. Happy trading everybody.

Posted by Newb > 2012-07-18 17:43 | Report Abuse

can anybody tell me how to differentiate which is a put and call warrant? as ive seen in maybank live quotes i cant see it wrote put warrant anywhere

Posted by alntm > 2012-07-18 17:47 | Report Abuse

newb - bursa website has listing profiles for all the warrants. its always good to check the details before buying. bursa->listed co->structured warrants..

Posted by necro > 2012-07-18 18:00 | Report Abuse

hurmmm....the warant that NOOBIES CAN ALWAYS TRADE IS MBf-wa...
i wish after this mbfhldg can make another warant namely mbf-wb...
hahahahhahahahahha

Posted by passerby > 2012-07-18 18:03 | Report Abuse

If you notice "counter name " - CA,CB,CC,CB,..etc - it is call warrant. If notice "counter name" - HA,HB,HC,..etc - it is a put warrant. Example , GENM-CA, CB, C1,C2, C3 are call warrants while CIMB-HA, MBSB-HA, GAMUDA-HA are put warrant. Those mentioned above are normally European Style Warrant-cash settled type issued by investment banks. While physical exercise warrants will carry initial of "W" - example - WCT-WB, WCT-WC, GAMUDA-WD, etc, issuer normally is the counter itself for fund raising purpose. Playing warrants is risky & people always quote "high risk, high gain" but one old man quoted to me the other way round " high risk, all GONE! ". So be-careful Newb.

Posted by necro > 2012-07-18 18:10 | Report Abuse

hahahhaha..
want to noe about warant??
go bookstore then search book name,
HOW TO MAKE MONEY IN WARANT...

Posted by Noran Yaakub > 2012-07-18 18:46 | Report Abuse

Thanks so much for the useful info, necro!

Posted by alntm > 2012-07-18 19:29 | Report Abuse

warrants are momentum indicators of the mother stocks. they offer a alternative investment to an expensive mother. One time to avoid warrants, or for that matter mother stocks, is when warrant exercise dates are closeby (esp 1 week before expiry) as IB influences will be in play to control mother price.

Posted by grss > 2012-07-20 11:49 | Report Abuse

Based on what Alntm says, BIMB price might be depressed to approximately 2.50 when BIMB CC nears expiry on 31 Sept 2012. That would mean BIMB HA is valued at 0.11.

Posted by grss > 2012-07-31 18:09 | Report Abuse

BIMB mother share drop by 0.05 today. Resistance at 3.00. Let's see what the near term outcome will be after ECB and Fed chief finish their meeting tonight.

Posted by passerby > 2012-07-31 22:43 | Report Abuse

Just would like to ask something here, when you guys play warrants, did you ever consider the followings:-

1) how many other players do you estimate who know how evaluate the price of warrant in this particular "pond"? or blindly follow only because it is high risk high gain, no risk no gain?

2)say if most of crowd here do not know how to evaluate the price properly, do you expect opponent would buy at the price you think is a fair value by tracking the mother price?

3)say the crowd in the pond don't buy at fair valuation tracking the movement of mother share, will the issuer bank buy back their warrant in a fair valuation for market making purpose?

4)what if issuer bank don't even bother to buy back? who is going to buy the volume ?

Think think before playing with fire. Put warrant is not popular in KLSE. If you play put-warrant at SGX,HKSE or NYSE, still got some hope.

Posted by alexlulu > 2012-07-31 23:02 | Report Abuse

passerby u r rite. very good points indeed.

we almost entered into the Guinness Book of Record as the most stupid nation in the world that has a stock market. a year ago when DRB goreng from 2.10 to 3.00, all call-warrants move up, including HA.
and what the hell has the issuing IB doing, they sit down and laughing their ass off while eating peanuts and drinking beer.

Posted by passerby > 2012-07-31 23:39 | Report Abuse

alexlulu - this lesson cost me a fortune back then

Posted by shahnd > 2012-08-24 09:54 | Report Abuse

hope people learn...down mother up HA people put that in mind please :D

Posted by Mat Cendana > 2012-08-24 12:07 | Report Abuse

Unfortunately, it doesn't seem to work like that with many investors here. I've seen the HA going up when the mother rises. That's crazy!:-)

Posted by daRRenL > 2012-09-06 13:44 | Report Abuse

what to do...many uncle auntie only "follow the group" -_-

Posted by brutusbeefcake > 2012-09-06 14:36 | Report Abuse

Mother down, HA going up. Buy before its too late.

Posted by grss > 2012-09-20 16:51 | Report Abuse

7 days to go...what shall HA price be?

Posted by Mat Cendana > 2012-09-20 17:08 | Report Abuse

You mean it expire next week...? I thought it's 8/3/13, as stated in The Edge.

Posted by passerby > 2012-09-20 18:59 | Report Abuse

I believe grss is referring to BIMB-CC. From observation, most likely grss is believing the IBs is going to depress the BIMB underlying & hoping on some positive movement on BIMB-HA in the next 7 days.

My opinions:-

1)Not much movement on BIMB-HA,unless another big financial crisis unveil or big disaster happening in the next 7 days.

2) BIMB-HA is issued by Ambank, no reason for CIMB to manipulate the underlying & let their competitor Ambank to sell more HA at higher price to public when CIMB gain is minimal.

3) Strike price of BIMB-CC RM2.00 vs current underlying RM3.10. I doubt they will throw their money to manipulate the underlying to make the CC out of money .CIMB IB can just let the BIMB-CC expired in money & make less money only. They know which SW is worth to be manipulated and which one is costly/risky to be manipulated.

Nevertheless, CIMB shall be disposing their required holding on underlying for the issuance BIMB-CC as preparation for the payment to BIMB-CC holders when BIMB-CC expired. If there is not much buyers in the next 7 days when CIMB disposing,selling pressure will surface.Yet, it won't be to the extend of making the BIMB-CC out of money.

On the BIMB-HA, people like me won't jump in just because one of the SWs is expiring.

7 days to go, it is a good time to verify how accurate are the opinions posted in this forum on SWs. Opinions might be wrong or right.

Posted by grss > 2012-09-24 11:47 | Report Abuse

Appreciate passerby input. It is up to individuals whether to invest in HA for coming days. Both sides agree that price of BIMB mother share will be pressed down. However, whether HA will go up as mother share go down, we shall see in the next few days. But what we can see here is this forum has played its part for ppl to post their opinions. I myself learnt a lot too from comments in this forum and become better in making decisions. Cheers to all investors and forumers.

Posted by cendana287 > 2012-09-24 11:59 | Report Abuse

There's not much activity with the HA but with the general market going down, I'm wondering whether it might turn into something like JCY's and AirAsia's HAs. If there's a sharp and sustained fall, the HA will go up. That's how the put warrants are supposed to work but we have seen that it is not always the case. But no harm in checking on it regularly.

Posted by cendana287 > 2012-09-24 12:23 | Report Abuse

My mistake about "not much activity" - this had picked up earlier and some speculators had stocked up. Some lucky chap even got it at 0.045.

Posted by grss > 2012-09-24 13:34 | Report Abuse

trading as of noon is 5x of average 4-week volume...

Posted by grss > 2012-09-24 13:36 | Report Abuse

and true,those who bought at 0.045 would have made approximately 25% gain in a day..real lucky chap

Posted by staphyloccocus > 2012-09-24 13:59 | Report Abuse

because got a dumb throw high volume at 0.045...but actually can sell it at 0.055...haha

Posted by passerby > 2012-09-24 14:56 | Report Abuse

Every trading method is never perfect & is vulnerable at certain point .If you can identify the weakness of the manipulation of IBs on underlying, hit it hard on this weakness point, you might benefit from it.

Posted by grss > 2012-09-24 16:01 | Report Abuse

It is sad to say that our stock can easily be manipulated by IBs, EPFs or whatsoever institutional fund. Lets just make the best out of it. We try to gain on their gain..

Posted by passerby > 2012-09-26 16:26 | Report Abuse

2 more days to do a conclusion from observation...waiting

Posted by passerby > 2012-09-27 11:44 | Report Abuse

1 more day to go....

Posted by passerby > 2012-09-28 16:38 | Report Abuse

observation concluding ...

Posted by grss > 2012-10-01 15:49 | Report Abuse

yes passerby, u got it this time. cheers... in fact, perhaps in future, u can share ur thoughts in more counters too.. i always enjoy reading differing views and opinions on the same counter. Broaden my knowledge.. Whether I execute or not, entirely up to me myself, but knowledge gained definitely make my execution better. Hope to see you in other counters =)