Posted by vinceooi > 2012-07-19 10:22 | Report Abuse

gogogo

Posted by Mat Cendana > 2012-07-30 19:12 | Report Abuse

Can someone knowledgeable in call warrants clarify this please? The -CA's exercise price is 2.48, ratio 2, expires 4/3/13. SKPetro's closing price today is 2.44 while the CA is 0.085. So, assuming that the CA remains the same at 0.085, what does the mother's price need to be before one breaks even on the expiry date - is it 2.565?

Posted by alntm > 2012-07-30 19:47 | Report Abuse

ok i give a shot ahem...:P
to make calculation easy, today u buy 2 ca wrnts @ 0.085 =0.17 (so that total profit back to u since ratio is 2:1). all costs aside, mother needs to be 2.65 (as 2.65-2.48 = 0.17) for u break even if u bought at 0.085.

however, this is ammb warrant; so u add costs!i.e. 2.65 + 0.3%*0.16 expenses + your total brokerage =?.

Of course this is theoritical since IB will push to 2.48 on expiry anyway.

Posted by Mat Cendana > 2012-07-30 22:14 | Report Abuse

alantm: Oh, that's how the 2:1 ratio works then. Thanks. So that means SKPetro will have to go up at least another 0.21 sen to reach that price. And that's not including the expenses. So I'm wondering, what's the logic in buying these call warrants? Why not just buy the mother share at 2.44 instead of the CA?

Posted by Mat Cendana > 2012-07-30 22:18 | Report Abuse

And one other question: Since the exercise price is 2.48 (only 4 sen away), I assume the CA will become more valuable (go higher) when the mother's price surpasses that, right?

Posted by alntm > 2012-07-31 02:19 | Report Abuse

bro mat, call warrants provide exposure to mother share movements for a fraction of costs. as u can see today, skpetro up 2.52% but ca is up 13.3%. However, you only profit 13.3% if you get a hit on 0.085 ca sell price(volume, therefore counts!), but u get the drift.

Because you have time on the warrant, it looks attractive, and if mother does go up and price v high, then you also get some extra $ at warrant expiry. (altho it seldom happens, IB influence will in play to push mother down so you get 0.)

ca price will definitely rise, as you move near exercise price or past it.

Now of course, the other way can b true, so you need to monitor mother movement carefully..

if the market is bearish, u may want to look at put warrants which work the other way i.e. reward you for prices below exercise price.

hope that helps..

Posted by Mat Cendana > 2012-07-31 11:28 | Report Abuse

Yes, this helps a lot. Okay, now I understand it better. I've not been interested in warrants before due to their having expiry dates (this beats the case against "buy and hold"). But it's obvious that one can make some serious money if he knows what he's doing. And having a certain percentage of luck too, of course. It also looks like a cheaper way to bet into counters that we feel will go up but which are a bit too costly to buy. However, it's obvious that one must do some homework first with the conversions and all.

Posted by Mat Cendana > 2012-08-01 15:20 | Report Abuse

Looks like the mother share has crossed the -CA's exercise price of 2.48.

Posted by alntm > 2012-08-01 15:36 | Report Abuse

congratz..if got more ECB/EU fuel lagi bagus..

Posted by Mat Cendana > 2012-08-01 15:42 | Report Abuse

And it's thanks to *you*, alntm. Went in after I understood what this call warrant is; the risks and the potentials.

Posted by alntm > 2012-08-01 15:48 | Report Abuse

my account # is...haha...just jking..gratz to you bro..:)

Posted by Mat Cendana > 2012-08-01 16:10 | Report Abuse

This successful trade has boosted my confidence in call warrants. From my previous zero interest in warrants (because I didn't really understand them until you, CP Teh etc. had explained in this thread and at BIMB-HA), I'm now allocating a certain percentage of my capital to invest/trade in them.

Doing research on the freshly-minted IHH call warrants now. IHH-CM seems to have the volume. But I feel the current premium is too high. Here are the figures:
Reference Price: 2.85
Ratio 4:1
Exercise Price: 3.42
-CM now at 0.09 Mother: 3.16 -- That means it must add 0.26 sen to reach the mother price. So, based on what you had taught me: 0.09 x 4 = 0.36 sen. That means the CM are rather over-priced, right?

Posted by passerby > 2012-08-01 17:58 | Report Abuse

It doesn't sound overprice, only at the premium of 3% only.(RM0.09x4 + RM 3.16)/RM 3.42 X 100% = 102.9%.

It is normal for a warrant with longer life span command premium price.

Discount over warrant will be apparent only when warrant is reaching it expiry ~ less than 2 months, you start notice people giving discount.

I have seen warrant commanding a higher premium over 20% but still got speculator willing to pay for the price.

Normal range of premium 5% ~ 15% depending on counters & which issuing IBs for new SW based on what I have observed so far. And for downtrend call warrant, the premium is always lower.

If you wanna reduce risk in playing warrant, looks for low gearing & in-money type of warrant.

Most importantly, the counter need to be in uptrend with certain amount volume traded.

Not encouraging people to play warrant, just share share useless information of mine. If possible, stay away. IBs are making money regardless the warrant in money or out of money.

If really want to know more read this :Money in Warrants: Leverage Your Way Multiply Profit by Alan Voon

Posted by alntm > 2012-08-01 18:18 | Report Abuse

bro mat, recommend you monitor volume of all IHH warrant + volatility of IHH share. Today IHH warrant sprout like mushroom...so many choice, expiry dates all far away, IB's competing for your hard earned $$$!

Am not sure if over-priced is the word, as momentum pays you. But since you getting 0 returns below breakeven price, you are paying a premium.

I prefer look at actuals, ie warrant volume, expiry, exercise price and warrant performance (re-active/laggy) to mother share.

like bro passerby said, not encouraging to play, as not all warrants are created equal.

Posted by passerby > 2012-08-01 18:25 | Report Abuse

The real warrant trader will price in the momentum in the premium as well...note, trade your warrant don't invest in your warrant.

Hold it for short period of time only.

The leverage effects is, RM 0.01 upward, you'll jump like crazy but if RM 0.01 opposite direction, you'll get heart attack.

And never average down this stupid instrument.

Posted by alntm > 2012-08-01 18:36 | Report Abuse

correct bro, don't be an involuntary investor!

Posted by Mat Cendana > 2012-08-01 18:38 | Report Abuse

passerby: That's the name I've been searching for - Alan Voon! He used to write weekly articles in a newspaper about warrants some years ago. Thanks very much. There are other experts in warrants, of course, but I'm more interested in those who specialise in BSKL.

Posted by Mat Cendana > 2012-08-01 18:59 | Report Abuse

Noted. Will tread with caution. For now, I will just focus on the warrants and mother of a few selected companies that include SKPetro (been following this since Day One) and IHH. And my TP will mostly be just 0.01 each time. If a profit comes in within the contra period (like this one), I'm just going to take the profit and walk away.

Posted by Mat Cendana > 2012-08-15 12:59 | Report Abuse

Seller: Please la give to me at 0.085. Only then will I have a fighting chance.

Posted by passerby > 2012-11-06 11:13 | Report Abuse

MC - counting your profit ?

Posted by Mat Cendana > 2012-11-06 11:39 | Report Abuse

Counting the profit I would have made had I not sold too early. Trying very hard to accept this and move on... because I did make a profit:-) Actually, had bought it lower than that - at 0.065. This is yet another lesson - when we have done our homework and feel that a counter has potential, and its CWs are selling at reasonable premiums with ex prices that "look possible", then buy and wait regardless of the sentiments at that time.

Warrants - for me, it looks like trading in them have been more profitable than investing. But one has to accept the losses that would inevitably come his way when he trades often enough. Can't have winners all the time. The trick is in reducing the losses to the minimum possible.

Posted by myboleh > 2012-12-14 11:43 | Report Abuse

i've only bought from mother share previosly, thinking to try out warrant (skpetro-ca) as well. how does skpetro-ca works? is it the same as the mother stock? if i bought skpetro-ca today at 0.24, can i sell it off next week, or i must trade off within the day? anything else to take note before invest in warrant (skpetro-ca)? tq. :)

Posted by Mat Cendana > 2012-12-14 12:32 | Report Abuse

When you start profiting from warrants, especially the percentage gained, you might feel reluctant to buy the mother again. But that's only when it's a good trade - when you end up on the wrong end, the loss will really hurt. But warrants are a great alternative to mother shares. Just be aware of its nature and the risks.

Posted by myboleh > 2012-12-14 12:40 | Report Abuse

thanks MC. I am currently reading the material. Will start with small amt (< 5k), and to sell it off posibly within the same day, or max hold it for 3 days... nothing more... :)