Posted by passerby > 2013-01-01 09:27 | Report Abuse

arigato Mr.Ooi from cityA1 & ex-contractor from NZ for some quality posts on 1st day of 2013 :)

Posted by Ooi Teik Bee > 2013-01-01 09:37 |

Post removed.Why?

Posted by kcchongnz > 2013-01-01 10:27 | Report Abuse

Ooi thanks for the information. Now I really got someone to check if what I was doing is correct or not. Just to clarify something here. First of all, are we having the same understanding here about volatility in option pricing? Historical volatility of a stock is the standard deviation of return of the stock. This is obtained by doing a statistical analysis of the prices of the stock, 3-month, 6-month, a year,or whatever, and determine the standard deviation, and that is the volatility. When you input this volatility of the underlying share in the option pricing model, it gives you the value of the option, or warrant. Implied volatility is that value of the volatility of the underlying instrument which, when input in an option pricing model will return a theoretical value equal to the current market price of the warrant. Hence when an option is trading at a volatility below its historical volatility, it may seem that the option is under-priced. The second thing is whether an option is American style or European style is whether you can exercise it before expiry date. In this case, American style can but not the European style. Hence in Bursa, company warrants are usually American style. Whereas all call warrants issued by investment banks are European style because you can't exercise the option before expiry date.
Am I o the right track?

Posted by Ooi Teik Bee > 2013-01-01 11:08 |

Post removed.Why?

Posted by hw0706 > 2013-01-01 12:13 | Report Abuse

my cost is lower than the 0.39 for ytlpower-wb

Posted by New Insight Sabah > 2013-01-01 12:48 | Report Abuse

Aren't you being simplistic in explaining implied volatility?

"... the conventional belief is that investors and traders should look only at the warrant with the lowest implied volatility. But this is only true if the issuer buy back their warrants at a proportionate volatility level. To illustrate, one is better off buying a warrant at a volatility of 60%, and sell it back to the issuer at 55% than to buy a warrant at a volatility of 40% and sell it back at 30%.

"The key issue that a warrant trader needs to consider when looking at volatility is not necessarily the absolute level of the volatility the warrant is priced at but rather the level at which the issuer is willing to buy back the warrant. This means consistency in managing volatility on the issuer’s part. Some issuers will change implied volatility intra-day whilst others hardly ever make adjustments. Recall that theta/time decay is one of the often-ignored Greeks in warrants and yet it can be a silent killer." - extracted from http://www.shareinvestor.com.my/?action=page&id=article6

Posted by New Insight Sabah > 2013-01-01 13:01 | Report Abuse

Happy new year!

Posted by investor77 > 2013-01-01 16:24 | Report Abuse

Title is promising warrant. Does it mean call warrants issued by Brokers, or Company issued warrants ?

Buying call warrants cheaply when underlying share is very oversold can be advantageous.,e.g. Air Asia -CW at one cent.( 1 sen only )The most you lose is RM100 for 10k. However, if Air Asia recovered during the time before maturity, you can make a bit. However, one has to be informed and know how to evaluate the call warrants.

For company warrants, IJM-WC at RM1.18 and Gamuda-WD at 0.95 could be a good choice and it is oversold. IJM has got Properties, Plantations, and tolls plus construction works.

Posted by bingo > 2013-01-01 16:36 | Report Abuse

thank you kcchongnz & Ooi Teik Bee on your opinion on WCT warrants. I would definately go for WCT WD, cheaper price, longer period to RIP & the really good returns based on the assumption that WCT will be moving higher. 5 years to RIP is a long period to invest for good returns & who know if by mid 2013, WCT moves higher to $3.20, ha ha ha

Quite confident WCT will move towards $3++ when KLIA2 opens in mid 2013. I will be collecting more as time moves on & tomorrow onwards I will start my collection.

Posted by KAHFIEHLAI > 2013-01-01 18:17 | Report Abuse

Need seniors' advice on the following:

1. WCT-WD , SKpres-WA, NestNat-WA
Where to look for ready figure for Imp. Vol as I am not good to caculate based on the http://www.numa.com/derivs/ref/calculat/option/calc-opa.htm

Sorry, I am very junior and hope to learn from u all.
Wish Happy New Year To All.

Posted by kcchongnz > 2013-01-01 18:39 | Report Abuse

Posted by New Insight Sabah > Jan 1, 2013 12:48 PM | Report Abuse
Aren't you being simplistic in explaining implied volatility?

NIS, I think what you say may mean something. Can you explain further what are you trying to put forward?

Posted by kcchongnz > 2013-01-01 18:57 | Report Abuse

investor77, I bought AirAsia CW at 4.5 sen a couple of months ago and it is only 1 sen now. Lost my pants. But anyway I agree with you CW is an exciting punt for 1 sen when AirAsia is 2.74 now. Though it is deep out-of-money and trading at a premium of 26%, it still have 4 months to expire and the gearing is very high at 68 times. Buy say 100000 at just RM1000 and prepare to lose all. But if you strike pay dirt, say something very positive about AirAsia comes out soon the return could be huge.
Also agree with you about IJM Wc that if IJM shares is really oversold and undervalued as mentioned by you, Wc may be a better bet than IJM because of the gearing of 4 times. At 1.19 and mother share at 4.98, the premium is also undemanding at only 4.2% while it still has 22 months before expiry.

Posted by kcchongnz > 2013-01-01 19:06 | Report Abuse

bingo you have your valid reasons for liking Wd. But don't you agree that the bird in your hand is better than two in the bush?
If you buy Wb now and convert and sell the converted share, you straight away get the 40+% return in two weeks as described before. In contrast, you only think that WCT can go up to 3++ in the future. Of course you have 5 years for this to happen to reap the profit. 5 years is a long time. I guess it is the confidence you have in WCT. But why not follow what Ooi said, buy Wb now. Reap immediate profit now. Then buy Wd?

Posted by kcchongnz > 2013-01-01 19:20 | Report Abuse

KAHFIEHLAI, For example if you want to find the implied volatility of WCT Wd, key in the data in the model:
share price 2.36
dividend yield % 2.9
maturity 4.4 years (approximately)
strike price 2.25
interest rate % 3.5
calculate highlight implied volatility and key in option price of 0.29
Press calculate and you get implied volatility value and even the time and intrinsic values of the option.

Posted by KAHFIEHLAI > 2013-01-01 19:51 | Report Abuse

Dear Kcchongnz
TQVM,Can u help to clarify the following.

Instrument Type
:
Warrants
Description
:
Issuance of 180,000,000 free warrants in SKP Resources Berhad (“SKP”) (“Warrant(s)”) on the basis of one (1) Warrant for every five (5) existing ordinary shares of RM0.10 each in SKP (“SKP Share(s)”)
Issue Date
:
27/06/2012
Issue/ Ask Price
:
Not Applicable
Issue Size Indicator
:
Unit
Issue Size in Unit
:
180,000,000
Maturity Date
:
27/06/2017
Revised Maturity Date
:
Exercise/ Conversion Period
:
5.00Year(s)
Revised Exercise/ Conversion Period
:
Exercise/Strike/Conversion Price
:
MYR 0.4500
Revised Exercise/Strike/Conversion Price
:
Exercise/ Conversion Ratio
:
1 Warrant:1 new SKP Share
Revised Exercise/ Conversion Ratio
:
Mode of satisfaction of Exercise/ Conversion price
:
Cash
Settlement Type/ Convertible into
:
Physical (Shares)
Remarks :
Each Warrant carries the entitlement to subscribe for one (1) new SKP Share at the exercise price subject to the following step-up mechanism:

(i) upon issuance of the Warrants up to (but excluding) the second anniversary of the issue date – RM0.45 per SKP Share;

(ii) exercise at any time on and from the second anniversary of the issue date up to (but excluding) the fourth anniversary date – RM0.55 per SKP Share; and

(iii) exercise at any time on and from the fourth anniversary of the issue date up to the maturity date of the Warrants – RM0.65 per SKP Share,

subject to the adjustments in accordance with the provisions of the deed poll dated 11 June 2012, constituting the Warrants. Any Warrants not exercised during the exercise period (as indicated above) will thereafter lapse and cease to be valid for any purpose.

This announcement is dated 2 July 2012.

Thanks in advance

Posted by KAHFIEHLAI > 2013-01-01 20:04 | Report Abuse

Dear Kcchongnz

I meant what is mean by item (i), (ii), (iii)?

TQ

Posted by New Insight Sabah > 2013-01-01 20:08 | Report Abuse

Thanks KCC for your response. As I don't know anything about warrant trading, I'm trying to learn as much as I can. Ooi says in one of his postings, "My rule is Volatility < 40% is the best. Sometimes, < 60% is still ok with me. I prefer < 40%." And then subsequently he says, "You cannot buy warrant or option if Implied Volatility is > 40%, it means that the price of warrant is no longer cheap. The rule is Implied Volatility must be < 40%." And then I found a fantastic article on warrants at shareinvestor.com.my which somehow contradicts the discussion here and so I posed the question with the relevant extracts. I must admit I'm confused by Ooi's comments. While I'm at it, I'm also a bit confused over his statement that "charts don't lie" and at the same time he tells us that charts do give us "false signals". This is all very contradictory and confusing to me. Unless of course the fault lies in me in not able to understand my native language.

Posted by kcchongnz > 2013-01-01 20:13 | Report Abuse

NIS, I think I will leave it to Ooi to respond to your query. He has his valid rules and points. Not everyone is the same though.

Posted by kcchongnz > 2013-01-01 20:16 | Report Abuse

KAHFIEHLAI, it appears that the exercise price is not fixed. It depends on when you exercise the warrants; the earlier you exercise, the lower is the exercise price. It encourages you to exercise earlier.

Posted by Ooi Teik Bee > 2013-01-01 20:52 |

Post removed.Why?

Posted by KAHFIEHLAI > 2013-01-01 21:24 | Report Abuse

Buy WCT-WB convert to WCT and sell. Is it OK?

WCT 2.35
WCT-WB Curr. Price 0.355
WCT wb exe. price 1.85
Cost per WCT is 2.205 (exclude misc chgs)

2 wks for wct to be ready!

Sorry, I am learning.
TQ

Posted by investor77 > 2013-01-01 21:26 | Report Abuse

Thank You Mentor Ooi for the reply. From chartnexus charts, Plantation shares on rebound. Can we use Tech Analysis, e.g. RSI to gauge which shares can rebound faster? Sometimes, a share after Break Peak, more often than not, it retraced back, e.g. PresBhd.

Before plantation downturn, R Sawit and TSH are investors favourites. Thus, worth to try these two shares ? Your opinion is highly valued.

Posted by New Insight Sabah > 2013-01-01 21:28 | Report Abuse

Thanks, Ooi.

Posted by investor77 > 2013-01-01 21:46 | Report Abuse

bro Kah,

FYI, I have just done what you mentioned and hope that after the 10 working days needed to change WCT-WB to mother , I can get some profit.

You should note also that Mudajaya-CH, a call warrant CW is undervalued as it is at a slight discount to its mother shares with one month to go. It could be worth a try if, you are daring and understand call warrants risk. In this case the difference is settled by cash, rather than by conversion. You have to pay RM20 as admin fee upon maturity of CW.

Posted by Ooi Teik Bee > 2013-01-01 21:49 |

Post removed.Why?

Posted by KAHFIEHLAI > 2013-01-01 21:55 | Report Abuse

Dear 77
Noted and Thanks for the info

Posted by investor77 > 2013-01-01 22:12 | Report Abuse

Dear Mentor Ooi,

Can you please tell what is GMMA system. At present using T3B system , combined with TA and FA.

How much does it cost to subscribe or learn ?

Posted by Ooi Teik Bee > 2013-01-01 22:23 |

Post removed.Why?

Posted by investor77 > 2013-01-01 23:16 | Report Abuse

I am in Melaka, and very long time never go to KL or PJ. Kindly give a website address or e mail to me. Does Mr Chin, who is responsible for outstationers, knows about this system too.?

My e mail is: ebh777@yahoo.com.

Thanks, and appreciate greatly your help as I have been losing my capital for most times.

Posted by lkloke > 2013-01-01 23:49 | Report Abuse

Thanks to all the valuable comments on warrants. Learnt a lot from you all.

Posted by kcchongnz > 2013-01-02 04:48 | Report Abuse

Posted by KAHFIEHLAI > Jan 1, 2013 09:24 PM | Report Abuse
Buy WCT-WB convert to WCT and sell. Is it OK?

Kahfiehlai, this issue has been commended many times in this thread on this page itself. Please read through at your own judgement. In investing or trading, there is always this risk and reward relationship. My opinion for this is that the reward far out weight the risk. Nevertheless, you still have to make your own call.

Posted by New Insight Sabah > 2013-01-02 07:14 | Report Abuse

Investor 77, you can get all the info you need on GMMA by just googling. Perhaps these should help: http://www.chartnexus.com/learning/gmma.php http://www.guppytraders.com/
http://www.investopedia.com/terms/g/guppy-multiple-moving-average.asp#axzz2Gli1ZJH1

There is no foolproof trading method or system.

Posted by kcchongnz > 2013-01-02 09:34 | Report Abuse

Yeah investor77, mudajaya CH is trading at a discount. But maybe CJ and CM are more exciting.

The following are the closing prices of Mudajaya and its call warrants on 2nd January 2013:
Warrants Price Ex date Intrs Value Premium Gearing Impl vol
CH 0.120 31/01/2013 0.123 -0.38% 7.28 NA
CM 0.065 31/10/2013 0.000 10.50% 13.44 21%
CN 0.105 12/11/2013 0.000 17.18% 6.24 42%
CJ 0.010 28/02/2013 0.000 8.78% 52.40 27%
CK 0.055 26/02/2013 0.000 9.35% 15.88 48%

*CH is trading at a discount but just 4 more weeks to expire, very short time. This warrant has the lowest risk but the potential quantum of gain is relatively low unless there is a big swing in Mudajaya in a short time.
*CJ and CK has the same premium at about 9% and expire the same time. Obviously CJ which has a much higher gearing and much lower implied volatility than CK and is more exciting to punt.
*CM and CN has approximately the same expiry date. Obviously CM is much better because of its lower premium, higher gearing and lower implied volatility.
*Between CJ and CM, CJ appears to be the better in risk-reward as its premium of 8.8% is the lower but its gearing is 4 times more when compared to CM, that is if you can get CJ at 1 sen. CM has a much longer expiry date and a lower implied volatility though. In both cases, their implied volatility in the twenties is very low compared to the historical volatility of Mudajaya of 43% and hence appear “cheap”.

Posted by martiniclub7 > 2013-01-03 09:13 | Report Abuse

WCT-WB.. Trading at a huge discount atm. Soon to correct itself.

Posted by ireferno > 2013-01-03 10:47 | Report Abuse

As at time of posting WCT-WB is trading at $0.35 and the mother share is trading at $2.32.

I've dug out that the exercise date is the following April, conversion ratio is 1:1 and the strike price is $1.85.
Mother share deducts the strike price to get an intrinsic value of $0.47(2.32-1.85). And this would be fully attributable to the warrant because the ratio is a mere one.
Shouldn't the warrant's price be worth $0.47? It's trading at quite a significant discount if you'd ask me.
Correct me if I'm wrong.

Posted by kcchongnz > 2013-01-03 14:38 | Report Abuse

Mudajaya is moving now. Its call warrants would have a lot of potential due to their high gearing. Watch out!

Posted by KAHFIEHLAI > 2013-01-04 00:14 | Report Abuse

Dear Kcchongnz

What is Cash Distribution?
For Kassets Curr. Price 2.55. Announced Cash Distribution 2.60. What is that mean and what is the impact on share value? Please advice..
Thanks alots

Posted by kcchongnz > 2013-01-04 01:58 | Report Abuse

Kafiehlai, this cash distribution means to give shareholders 2.60 for each share of kassets held before ex-date. I think after that kassets will be delisted from Bursa. Likely scenario is the share price will run up to 2.60 before ex-date. This is what i think.

Posted by KAHFIEHLAI > 2013-01-04 02:40 | Report Abuse

Dear Chong

Why the co. announement made on 5.40 pm today didnot mentioned single on the Delisted? You may have a look on their co. announcement.
tks

Posted by kcchongnz > 2013-01-07 15:28 | Report Abuse

Tenaga seems to be interesting now looking at the bid-asked. Will it surge? If so Tenaga call warrant CW at 5 sen is very exciting punt. It is moving from out-of-money towards in-the-money now. At 6.96 for Tenaga share, CW is trading at 4.2% premium and with more than 2 months to expire. Gearing is huge at 28 times.

Posted by necro > 2013-01-07 15:33 | Report Abuse

Any corp wa 5hat intresting

Posted by kcchongnz > 2013-01-07 15:42 | Report Abuse

WCT wb, discount 5.7%. Wd long expiry, premium only 8.7%, gearing 7.7x, implied volatility 13% much less than the historical volatility of WCT.

Posted by necro > 2013-01-07 15:46 | Report Abuse

What about wb conversion to mom...
Does have effect on wd?

Posted by kcchongnz > 2013-01-07 15:50 | Report Abuse

The movement of WCT today seems to show that the sale of any converted Wb shares were well absorbed.

Posted by Jian Bin Siew > 2013-01-07 15:50 | Report Abuse

Can WCT sustain in RM2.35 for 2 weeks??? If can, then WCT-WB is the best!!!

Posted by anulus81 > 2013-01-07 15:51 | Report Abuse

EPF & THH buy/support any selling shares...

Posted by kcchongnz > 2013-01-07 15:53 | Report Abuse

Posted by Jian Bin Siew
Can WCT sustain in RM2.35 for 2 weeks??? If can, then WCT-WB is the best!!!

Only God knows. But God won't help punters even if they pray hard.

Posted by tonylim > 2013-01-07 16:19 | Report Abuse

LOL

Posted by necro > 2013-01-07 16:44 | Report Abuse

Hahaha..
New version of wat buffet said...
STOCK MARKET LIKE A GOD BUT STOCK MARKET TEND TO NEVER FORGET WHO DOING A MISTAKE....

Posted by tonylim > 2013-01-17 12:47 | Report Abuse

.