Posted by kcchongnz > 2013-07-09 12:23 | Report Abuse

Let me start with the first one, Bursa call warrants.

There are 5 call warrants for Bursa on 9/7/2013.

Warrant Price Ex-Price Ex-Ratio Expiry date Premium Gearing
C1 0.345 6.30 5.00 26/08/2013 1.5% 4.6
C2 0.300 6.30 6.00 18/11/2013 2.4% 4.4
C3 0.360 6.60 4.00 28/02/2014 1.6% 5.5
C4 0.125 8.00 4.00 30/05/2014 7.5% 15.8
CZ 0.330 6.50 4.00 31/07/2013 -1.1% 6.0
Bursa share price at 7.91 on 9/7/13

C4 has the highest premium of 7.5% while CZ is trading at a discount of 1.1%. This means that if Bursa share price just stay the same now at RM7.91 at the expiry of CZ in three weeks time, buyers of CZ at 33 sen now would gain 6.6% as the gearing is 6 times (1.1%*6). CZ provides the safest bet among all the call warrants due to its discount. However it is quite close to their expiry date now with just three weeks to expiry.

If Bursa share price goes up by 7.5% to RM8.50, holders of CZ can gain 51.5%. But if Bursa share price falls to RM7.5, CZ holders can lose 24%. This is the leverage effect of call warrants.

C4, now trading at 12.5 sen, is at the highest premium of 7.5%. Does it mean that it is the most expensive? Not necessary. C4, expiring on 30/5/2014, has the longest time to maturity and highest gearing of 16 times. If one anticipates that there is high volatility of Bursa share before the expiry of C4, which is still more than 10 months to maturity, it provides the most exciting play.

The table below shows the payoff of the call warrants when they are cash settle off at expiry for various prices of Bursa share price.

Uly Price 6.50 7.50 7.91 7.95 8.00 8.20 8.50 8.80 9.35
Bursa -17.8% -5.2% 0.0% 0.5% 1.1% 3.7% 7.5% 11.3% 18.2%
C1 -88.4% -30.4% -6.7% -4.3% -1.4% 10.1% 27.5% 44.9% 76.8%
C2 -88.9% -33.3% -10.6% -8.3% -5.6% 5.6% 22.2% 38.9% 69.4%
C3 -100.0% -37.5% -9.0% -6.2% -2.8% 11.1% 31.9% 52.8% 91.0%
C4 -100.0% -100.0% -100.0% -100.0% -100.0% -60.0% 0.0% 60.0% 170.0%
CZ -100.0% -24.2% 6.8% 9.8% 13.6% 28.8% 51.5% 74.2% 115.9%

If Bursa share price goes up by 11.3% within this ten months, buyers of C4 now at 12.5 sen can potentially gain more than 60%, or 170% if Bursa share price can go up by 18.2% to RM9.35. But if Bursa share price falls below RM8.00, holders of C4 loss everything.

Posted by iafx > 2013-07-09 12:33 | Report Abuse

To make gambling more exciting go to genting. correct understanding of call warrant: http://www.investopedia.com/articles/04/021704.asp

Posted by tonylim > 2013-07-09 12:34 | Report Abuse

Bro, c3 and c4, no special mention? Already bght some c3, dude
Thks for the executive summary

Posted by leviathan > 2013-07-09 12:34 | Report Abuse

Trop-CA.....saving you some time to compare

Posted by kcchongnz > 2013-07-09 12:38 | Report Abuse

tonylim,
I should thank you for asking me to look at Bursa call warrants. I made quite good profit from CZ and C4.

What do you mean by no special mention of C4. I specially mentioned C4.

Posted by kcchongnz > 2013-07-09 12:43 | Report Abuse

Posted by iafx > Jul 9, 2013 12:33 PM | Report Abuse
To make gambling more exciting go to genting. correct understanding of call warrant: http://www.investopedia.com/articles/04/021704.asp

Somebody obviously don't know anything about call warrants and the excitement of punting of call warrants.

Hey the link you appended is just the very basic of telling you what a warrant is. That is all. Do you understand it? But anyway understanding what is written there is like reading abc only.

What is important is much more than that; stuff like premium, gearing, and all those stuff I wrote about in order for you before punting in call warrants. Any questions?

Posted by tonylim > 2013-07-09 12:43 | Report Abuse

Sorry I wanted to elicit yr views on c3

Posted by tonylim > 2013-07-09 12:46 | Report Abuse

Iafx and forummers.. beware forewarned.
Cw are bulls instruments and the fundamental and behavior of underlying shares are paramount

Posted by tonylim > 2013-07-09 12:48 | Report Abuse

My q is a brief on c3 as of now.
Ceteris parabus

Posted by Trader Hub > 2013-07-09 12:52 | Report Abuse

c3 looks to be most value for money as of now, and it has a maturity in 2014.

See:
http://klse.i3investor.com/servlets/stk/wapi/1818c3.jsp
http://klse.i3investor.com/servlets/stk/warelated/1818c3.jsp

Posted by iafx > 2013-07-09 12:52 | Report Abuse

@tony, tks and no worry, being working on warrant long enough. warrant as alternate investment instrument, must not treated like gambling or guarantee will get burnt

beware forewarned those once written like a "saint", is actually a rubbish gambler underneath. wanna gamble go to genting... don't forget your 5 chop sticks

Posted by Drachen > 2013-07-09 12:55 | Report Abuse

I don't quite understand much of it. And while I'm at it, perhaps i3 investor.com can consider allowing tables to be posted in its forum, and even charts, to make reading of comparative statistics easier. Thanks and regards.

Posted by kcchongnz > 2013-07-09 12:55 | Report Abuse

tonylim, you must have a lot of money in C3. When is the treat?

If you refer to the table I just posted, you can see that C3 at 36 sen, is trading at a premium of just 1.4%. That means if you buy C3 now at 36 sen, you just need Bursa share to go up by 1.4% to RM8.04 before the expiry date of C3 on 28/2/2014, you will breakeven your cost. Hack, C3 has about half a year before expiry. Can't Bursa share go up by just 1.4% within this half year? This means C3 is hell of a good punt to me.

Looking at the payoff table again I posted. If Bursa share price can go up by 11% to RM8.80 within this 6 months, C3 can potentially make more than 53% profit.

However, the gearing of C3 is good at 5.5 times but not as high as C4 which is 15 times. That was why I prefer C4.

Posted by kcchongnz > 2013-07-09 13:01 | Report Abuse

Posted by iafx > Jul 9, 2013 12:52 PM | Report Abuse
@tony, tks and no worry, being working on warrant long enough. warrant as alternate investment instrument, must not treated like gambling or guarantee will get burnt

beware forewarned those once written like a "saint", is actually a rubbish gambler underneath. wanna gamble go to genting... don't forget your 5 chop sticks

Hehe, I am no saint and never claimed to be anything. Neither I am rubbish gambler. 5 chopsticks? You know about warrants? Working long enough on warrants? Well we can go to a special thread and discuss about all these. The last time you just chicken out.

My take is that you know nuts about finance and investment, not to mention options and warrants. that was why you never have the guts because you know nothing, absolutely nothing.

Posted by Drachen > 2013-07-09 13:21 | Report Abuse

Thanks kcchongnz. Ab uno disce omnes. Very tempting. Will buy some at 36 sen. Best regards.

Posted by hornydog > 2013-07-09 13:37 | Report Abuse

Yaya, warrants - can win big, can lose big. Can cause some people to jump from tall buildings if bet wrongly hahaha...

Posted by AK $$ > 2013-07-09 13:42 | Report Abuse

Be careful given the volatile market. I am burnt holding Astro's CB warrants due to expire end of next month that is just worthless cos the ex price has never been achieved by mother.

Posted by kcchongnz > 2013-07-09 13:54 | Report Abuse

Posted by Drachen > Jul 9, 2013 01:21 PM | Report Abuse
Thanks kcchongnz. Ab uno disce omnes. Very tempting. Will buy some at 36 sen. Best regards.

Just be reminded that the value of the call warrant moves minute to minute wrt the underlying share price. Before punting on call warrant, understand it first.

Yes, call warrant is nothing but for punting. It is not, I repeat an "alternative investment instrument" as mentioned by somebody.

You will likely to lose money if you don't know enough to gamble this thingy. But "guarantee will get burnt"? Not necessary. Of course if you simply hantam without knowing anything, then it is likely to lose money.

Posted by kcchongnz > 2013-07-09 13:56 | Report Abuse

Posted by leviathan > Jul 9, 2013 12:34 PM | Report Abuse
Trop-CA.....saving you some time to compare

Thanks for sharing. But could you tell us why you like to punt on Trop-CA?

Posted by Whei Wong > 2013-07-09 14:39 | Report Abuse

when we buy warrants... at this expiration of the warrant, do we need to exercise to mother share or it's optional?

Posted by JTFX > 2013-07-09 14:46 | Report Abuse

Warrants gv u the multiple leverage..more bang for ur buck..I prefer warrants issued by the company itself..WAs, WBs n esp. the longer tenures..

Posted by Drachen > 2013-07-09 14:49 | Report Abuse

Thanks kcchongnz. Your kind advice well noted. Nobody seems to be buying.

Posted by kcchongnz > 2013-07-09 17:24 | Report Abuse

Drachen,
The problem with most call warrants is the illiquidity. Few punters of call warrants around and hence pricing has to depend on the market makers. The market makers are generally not fair in the market making with high bid-asked spread. So punting call warrants is a disadvantage for retail punters.

But if you are bullish about a stock, and even though its call warrants are illiquid, but if their asking prices are cheap and sell at low premium and high gearing, they are worth punting.

Take for example the call warrants of Bursa which I posted acouple of weeks ago when tonylim asked me in the appended post below. If tonylim have bought C3 and CZ at 27.5 sen and 28 sen respectively, paying at a higher spread, he would have made very handsome profit because Bursa share price went up quite a bit. You can sell C3 and CZ at 35 and 34 sen respectively now as there are ready buyers at those prices. The profit would be about 25%, for a holding period of 2 weeks. Not bad at all.

Posted by kcchongnz > Jun 23, 2013 06:50 PM | Report Abuse X
Posted by tonylim > Jun 22, 2013 06:55 PM | Report Abuse
kcchong, if Bursa is in your screens, care to write some notes here on its cw.

There are 5 call warrants for Bursa on 23/6/2013.

Warrant Price Ex-Price Ex-Ratio Expiry date Premium Gearing
C1 0.265 6.30 5.00 26/08/2013 0.3% 5.7
C2 0.285 6.30 6.00 18/11/2013 5.4% 4.4
C3 0.275 6.60 4.00 28/02/2014 1.3% 6.9
C4 0.140 8.00 4.00 30/05/2014 12.6% 13.6
CZ 0.280 6.50 4.00 31/07/2013 0.3% 6.8
Bursa share price at 7.60 on 23/6/13

C1 and CZ has the same lowest premium of 0.3%. This means that if Bursa share price just go up by 0.3% from RM7.60 now at the expiry of the respective call warrant, punters who have bought C1 and CZ at 26.5 sen and 28 sen respectively would make money when they cash settle the call warrants at expiry. C1 and CZ provide the safest bets among all the call warrants due to their low premiums. However they are quite close to their expiry date now with about 1 to 2 months time.

C3 with slightly higher premium at 1.3% would be a better punt than C1 and CZ by virtue that it has a much longer expiry date of 8 more months to go, hence more chance for it go up by more than its premium of 1.3% now. I personally would prefer to punt on this call warrant.

Some punters may like the explosive, C4, as it has a much higher gearing of 13.6 times and the longest expiry date. However, it’s premium is relatively higher at 12.6%. If one anticipates that there is high volatility of Bursa share before the expiry of C4, it provides the most exciting play.

Eventually whether one can make money from punting on the call warrants is very much dependent on the rise of Bursa share price. The additional risk is that at RM7.60 now, Bursa is already above the average target price of RM7.53 by the investment banks.

The table below shows the payoff of the call warrants when they are cash settle off at expiry for various prices of Bursa share price.

Uly Price 6.50 7.00 7.60 7.63 8.00 8.20 8.40 8.80 9.35
Bursa -14.5% -7.9% 0.0% 0.3% 5.3% 7.9% 10.5% 15.8% 23.0%
C1 -84.9% -47.2% -1.9% 0.0% 28.3% 43.4% 58.5% 88.7% 130.2%
C2 -88.3% -59.1% -24.0% -22.5% -0.6% 11.1% 22.8% 46.2% 78.4%
C3 -100.0% -63.6% -9.1% -6.8% 27.3% 45.5% 63.6% 100.0% 150.0%
C4 -100.0% -100.0% -100.0% -100.0% -100.0% -64.3% -28.6% 42.9% 141.1%
CZ -100.0% -55.4% -1.8% 0.4% 33.9% 51.8% 69.6% 105.4% 154.5%

Posted by Drachen > 2013-07-09 18:29 | Report Abuse

Wow! kcchongnz. Thank you very much for taking the trouble with such an exhaustive explanation. Deeply touched, and greatly appreciate your effort. But it leaves me wondering whether I should buy not knowing if there will be people to buy and it's time for me to sell to take profit. Yes, illiquidity has always been a problem not just with call warrants but with stocks as well. There are many illiquid stocks on Bursa. Best regards.

Posted by Fat Cat Tim Buddy > 2013-07-09 19:49 | Report Abuse

i would not buy CW, because it is highly manipulate by the banks, and it can be easily done.

kcchong, rmb mat candenna ? he sure lost a lot on apple CW, the tm-cu he recommend now is basically worthless ( i warned about tm-cu before )

conclusion, i just dont find CW is worth the effort.

i dont find thrill in losing money, because my sifu g.soros told me before : “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”

kikiki..

Posted by houseofordos > 2013-07-10 00:21 | Report Abuse

How about Hapseng-CF ?

Hapseng-CF is trading at a discount of 2.26% to mother with 5 months to go before expiry. Based on chart, HAPSENG (mother) is moving up in a nice uptrend well supported by the 13d-EMA line. Below analysis shows a scenario on the effect of mother share movement to warrant

HAPSENG-CF (09/7/13)
Mother share 1.99
Exercise price 1.63
Warrant price 0.21
Exercise ratio 1.50
Gearing 6.32
Premium/Discount -2.26%

Mother share price change (%) -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00%
Mother share 1.69 1.79 1.89 1.99 2.09 2.19 2.29
Exercise price 1.63 1.63 1.63 1.63 1.63 1.63 1.63
Warrant price 0.04 0.11 0.17 0.21 0.31 0.37 0.44
Warrant price change (%) -80.48% -48.89% -17.30% 0.00% 45.87% 77.46% 109.05%


Would an underlying warrant always move up together with mother share ? Illiquidy is one issue, another is if a dividend payment is imminent, warrant holders would lose out because (i) they are not entitled to dividend (ii) mother share price typically corrects after ex-date for dividend and this will impact the warrant as well.

Posted by tonylim > 2013-07-10 01:18 | Report Abuse

Houseoflords,

Yes, dividends payments is crucial as it will affect the price of the underlying mother shares

Posted by kcchongnz > 2013-07-10 06:20 | Report Abuse

A good advice below for those thinking about punting call warrants from fei mau:

Posted by Fat Cat Tim Buddy > Jul 9, 2013 07:49 PM | Report Abuse
i would not buy CW, because it is highly manipulate by the banks, and it can be easily done.
kcchong, rmb mat candenna ? he sure lost a lot on apple CW, the tm-cu he recommend now is basically worthless ( i warned about tm-cu before )
conclusion, i just dont find CW is worth the effort.
i dont find thrill in losing money, because my sifu g.soros told me before : “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
kikiki.

Yes, call warrants can be manipulated by the investment banks, especially those call warrants of lowly traded stocks. Bursa share may be one of them. but for those more liquid stocks like Maybank, it may not be that easily. If IB want to lower the intrinsic value of say Maybank call warrants, it has to press down its price just before expiry of a call warrant. but if the underlying share price is fairly priced or already undervalued, institution will grab the share and hence bring the price back to its fair value.

What your sifu g.soros said “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” is very true. Totally agreed.

Posted by divine > 2013-07-10 06:33 | Report Abuse

Sifus here your thots on supermax- cm?

Posted by kcchongnz > 2013-07-10 07:25 | Report Abuse

There are 4 call warrants for Supermax on 10/7/2013.

Price Ex-Price Ex-Ratio Expiry date Premium Gearing
CN 0.130 1.90 2.00 28/02/2014 8.5% 7.7
CL 0.040 2.00 3.00 20/09/2013 6.5% 16.6
CM 0.030 2.20 3.00 28/11/2013 15.1% 22.1
CK 0.015 2.00 3.00 20/09/2013 2.8% 44.2
Supermax share price at 1.99 on the close of 9/7/13

From the table we can straight away rule out CL as it has the same expiry date as CK, but it is traded at a significant premium of 6.5% compared to that of 2.8% for CK. Moreover, the gearing of CK is much higher than that of CL. The shortcoming of both warrants is that they have only 70 more days to expiry.

CN with a longer expiry date than CM and traded at a significant lower premium of 8.5% compared to 15.1% of CM and hence it is at a lower risk. In fact CN is the only call warrant which is “in-the-money”. However, punters may prefer to gamble on CM because it has a significant higher gearing than CN.

Looking at the premium, CM is the most expensive call warrant of Supermax at a premium of 15.1%. That means punters of CM will only get to make money if Supermax share price can go up by 15.1% to RM2.29 before its expiry. This may be a bit difficult considering that CM has slightly more than 4 months to expiry. So I would rate CM as the highest risk call warrant of Supermax.

Which call warrant I prefer? I personally would prefer CK which is has the lowest premium but the highest gearing. It may be a short time to expiry, but for call warrants, 70 days can be long enough for Supermax to go up by more than 2.8% for punters to make money. If Supermax share price can go up by 10% within this 70 days, CK buyers at 1.5 sen now can potentially gain 350%. If Supermax share does not go up at all, of course you lose everything.

In the stock market, nothing is impossible, though one has to weigh on the probability, and the risk-reward. And do not be too greedy to punt too much on it.

The table below shows the payoff of the call warrants when they are cash settle off at expiry for various prices of Bursa share price.

Uly Price 1.95 1.99 2.10 2.20 2.29 2.40 2.50
Supermax -2.0% 0.0% 5.5% 10.6% 15.1% 20.6% 25.6%
CN -80.8% -65.4% -23.1% 15.4% 50.0% 92.3% 130.8%
CL -100.0% -100.0% -16.7% 66.7% 141.7% 233.3% 316.7%
CM -100.0% -100.0% -100.0% -100.0% 0.0% 122.2% 233.3%
CK -100.0% -100.0% 122.2% 344.4% 544.4% 788.9% 1011.1%

Posted by divine > 2013-07-10 07:48 | Report Abuse

thank you kcchongnz

I think there was some interest in maybank-cw went yp by half ct yesterday I think. your thoughts/

Posted by houseofordos > 2013-07-10 07:51 | Report Abuse

KC,

Price Ex-Price Ex-Ratio Expiry date Premium Gearing
CK 0.015 2.00 3.00 20/09/2013 2.8% 44.2

Check out this site
http://www.bursawave.com/stock-search/warrant/supermx-ck-cw-supermax-corporation-bhd-cimb-1237/

Ex-ratio = 2 , EX price =2.2.

Posted by Drachen > 2013-07-10 07:55 | Report Abuse

Thank you very much for all the opinions and advice. It's fun here, but investing has certainly been boring for me. Yet I'm not making money! Absit invidia (No offence meant).

Posted by kcchongnz > 2013-07-10 08:05 | Report Abuse

house,

You are right. I made a mistake. It must be when I changed the spreadsheet using another call warrant, i did not change the details of the warrants to Supermax CK.

So with that, all call warrants of Supermax seem to be overpriced. CK is not worth punting because the premium is 12% with one month plus to expiry. The gearing is high though at 66 times.

So there is a high probability that i am going to lose all my money in CK.

That is the reason why i try to get kakis here for punting of call warrants. They can correct my mistakes. Thanks house.

Posted by kcchongnz > 2013-07-10 08:14 | Report Abuse

house, you got all the correct assessments of call warrants as shown by your introduction of HapSeng CF. Well done.

Just one, as Hapseng CF is at a discount of 2.3%, why is your payoff at 0, and not 14.3% (2.26%*gearing of 6.2)?

Yeah, dividend is a bad thing for HapSeng. There is a dividend of 8 sen ex-dated on 23/7/2013. Normally the share price of HapSeng will be adjusted downwards by that amount. So if it is so, CF is no more at a discount but at a premium of 1.8%. Not too much considering it still has about half a year to expire.

But it is really hard to say. Will the price of Hapseng go up further until just before the dividend payment? Or the dividend is already fully reflected in the share price?

Posted by houseofordos > 2013-07-10 08:51 | Report Abuse

kc, you are right, I was just using the current price as a reference. The payoff should be 14.3% as what you mentioned assuming the share price of hapseng and warrant stays the same at expiry.

Posted by kcchongnz > 2013-07-10 09:09 | Report Abuse

Posted by divine > Jul 10, 2013 07:48 AM | Report Abuse
thank you kcchongnz
I think there was some interest in maybank-cw went yp by half ct yesterday I think. your thoughts/

Yeah, another undervalued call warrant in Maybank CW. At 25 sen while the underlying share at 10.46 now, it is trading at a discount of 2%. With a gearing of 8.4 times, the potential gain is 17%, if it is a American style option. but it is not, it is a European style option.

It is really a good punt. There is no likelihood that there is declaration of dividend for Maybank in the near term too.

Posted by iafx > 2013-07-10 09:12 | Report Abuse

www.warrants.com.my

Posted by kcchongnz > 2013-07-10 09:29 | Report Abuse

Can you tell me what is the message you want to tell us by appending the link? Do you understand what Alan Voon talks about? Do you know the website is about company warrant? Can you differentiate a company warrant and a call warrant?

Posted by iafx > 2013-07-10 09:37 | Report Abuse

Risk of investing in Warrants: http://moneycompass.com.my/en/risk-of-investing-in-warrants/

more reading: http://www.warrants.com.my/

Posted by kcchongnz > 2013-07-12 06:48 | Report Abuse

Since I started this thread, I better to a bit more responsible. So below I re-post something I have done before in i3.

Posted by kcchongnz > Oct 7, 2012 05:37 PM | Report Abuse X

Just read this article by cpteh, good one. As I myself have been writing about punting (yes punt, not invest)call warrants in i3investor, I think I need to remind readers about this educational piece. Yes, without proper knowledge about call warrants, you are extremely likely sent to Holland. Read the following research finding:

[In their 2009 paper on “option trading and individual investor performance” , Rob Bauer, Mathijs Casemans and Piet Eichholtz examine the performance and persistence of individual investors trading at a Dutch online broker. Using a database consisting of more than 68,000 accounts and eight million trades in stocks during January 2000 to March 2006, they find that the bottom tenth of performance lose more than 90% of value!]

Punting call warrant which is a form of option has more disadvantages in Bursa because SC won't protect small retailers. Market makers, insiders and big time speculators control and manipulate the market.

Do you know that every time maker makers issue new call warrants, they are selling them at extremely high price (or high volatility)? They control the bid-ask spread, the settlement price by pressing down the underlying share price at expiry of the call warrants etc.

But that doesn't mean one has no chance to beat them. To do that one must know this instrument well, understand your risks, and win against the emotion of the market participants, etc.

Yeah, without arming with all the above, stay far far away from call warrants. On the other hand, punting of call warrants may provide you with some excitement in the stock market.

Posted by kcchongnz > 2013-07-12 07:56 | Report Abuse

Is TM CU a dead duck?

Posted by Fat Cat Tim Buddy > Jul 9, 2013 07:49 PM | Report Abuse
kcchong, rmb mat candenna ? he sure lost a lot on apple CW, the tm-cu he recommend now is basically worthless (i warned about tm-cu before)


At the close of TM share price on 12 July, 2013 at RM5.38, it does appear that TM CU shareholders would end up holding a worthless piece of paper. This is because CU now is way out-of-the-money. With an exercise price of RM6.00 , TM share price has to go up by 62 sen, or 11.5% in order to be in-the-money. And this TM share price has to accomplish it within 80 days before the expiry of CM on 30/9/2013, a short period.

If one is thinking of punting TM CU, buying 1m shares at half a sen for RM5,000, he can only make money if TM share price can move up close to the exercise price within this 80 days. The likelihood is he will probably lose all the money.

However, if something good happens to TM and its share price exhibits high volatility and move up above RM6.00, great reward can be obtained by punters. This is due to its very high gearing of 270 times and effective leverage of 28 times now. This high gearing and effective leverage (gearing*delta) means that CU moves up many times more in term of percentage gain when TM share price goes up.

Table 1 below shows the gain/loss of CU at various settlement price of TM.

Table 1: Gain/loss of CU
Uly Price 6.00 6.01 6.02 6.04 6.10 6.20 6.50
TM 11.5% 11.7% 11.9% 12.3% 13.4% 15.2% 20.8%
CU -100% -50% 0% 100% 400% 900% 2400%

Holders of CU bought at half a sen now lose all his money if TM shares does not go up to RM6.00 at expiry of CU. He would break even if TM share price goes up by 11.9% to RM6.02 at settlement. However, if a black swan event occurs when TM moves up to RM6.50, punters can make 24 times the profit, or RM120,000 with a RM5,000 punt.

Table 2 below shows the latest target prices of TM by various investment bankers with a low of RM5.30 , a high of RM6.75, with an average of RM5.90.

Table 2: Target prices of TM
HLG RHB Kenanga MIDF PBB TA Macquie Av
5.82 5.30 5.91 6.75 5.95 6.07 5.50 5.90
3/07/13 1/07/13 3/07/13 31/05/13 31/05/13 31/05/2013 31/05/13

TM traded at a high of RM6.30 before in 1st October last year. In stock trading, nothing is impossible. So it may be too early to say that TM CU is a dead duck now. It just need some spikes of volatility for TM within this 80 days.

Table 3: Appendix, conversion details of TM CU
Price Ex-Price Ex-Ratio Expiry date Premium Gearing
0.005 6.00 4.00 30/09/2013 11.9% 269

Posted by Esque > 2013-07-12 07:59 | Report Abuse

Very interesting read.
TQ.

Posted by houseofordos > 2013-07-12 12:41 | Report Abuse

kc you mentioned you hold some Mudajaya warrants ? Care to share which ones are worht punting ? I feel there is upside potential for this stock.

Posted by kcchongnz > 2013-07-12 13:29 | Report Abuse

house, I have read your posting of Hapseng call warrants before. You know exactly what to do. Use your spreadsheet and try too evaluate.

I promise to add on to what you will post. We have to do this together already.

Posted by teo899 > 2013-07-12 14:59 | Report Abuse

Hi kc, care to share how to calculate gearing?

Posted by iafx > 2013-07-12 15:56 | Report Abuse

no need to beg other, such information is EVERYWHERE on the web: http://1-million-dollar-blog.com/how-to-calculate-gearing-premium-cash-settlement-for-call-warrants/

Posted by kcchongnz > 2013-07-12 16:19 | Report Abuse

You know ah when you do an assignment for some study, you may refer to some website. But you cannot put the link there and tell your lecturer that is the way to calculate gearing or what. You must also not just copy the formula. You must put everything in your own words, meaning paraphrase it, and give examples with some figures. If not you don't get any mark one you know. Never go to college before ah?

Posted by houseofordos > 2013-07-15 01:14 | Report Abuse

Find these 2 Mudajaya warrants may be interesting

Mudajya-CP
Expiry :- 30/5/14
Ex price :- RM2.4
Ex ratio :- 2
Warrant price :- RM 0.2
Mother price : RM2.58
Premium :- 8.53%
Gearing :- 6.45

Scenario analysis
Mother change (%) -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00%
Mother share 2.19 2.32 2.45 2.58 2.71 2.84 2.97
Exercise price 2.40 2.40 2.40 2.40 2.40 2.40 2.40
Warrant change (%) -100% -100% -87.25% -55.00% -22.75% 9.50% 41.75%

MUDAJYA-CO
Expiry :- 30/1/14
Ex price :- RM2.6
Ex ratio :- 3
Warrant price :- RM 0.08
Mother price : RM2.58
Premium :- 10.08%
Gearing :- 10.75

MUDAJAYA-CO
Mother share price change (%) -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00%
Mother share 2.19 2.32 2.45 2.58 2.71 2.84 2.97 3.10
Exercise price 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60
Warrant price change (%) -100.00% -100.00% -100.00% -100.00% -54.58% -0.83% 52.92% 106.67%

I would punt on either one of these warrants due to low premium with more than 6 months to expiry and also since I have confidence in mother share...

Any inputs ? Thanks

Posted by tonylim > 2013-07-15 01:35 | Report Abuse

House, mudajaya prices has been in the doldrums for some time.
Go check the price chart