Posted by kcchongnz > 2013-07-15 06:02 | Report Abuse

house, you got all the computation correctly done and you have chosen the best 2. Both of them are issued by CIMB, which is important too as CIMB is the best market maker.

Yeah, if you think Mudajaya share price will have a good run in the short to middle term, punting its call warrants will provide you with better windfall.

A premium of 10% means the underlying share must go up by 10%, or to the exercise price of that warrant, before the expiry of the warrant, then only you can make money buying the warrant at present price. So for CO, you must believe that this can happen within 6 months.

Both CO and CP have approximately the same implied volatility. I personally prefer CO though CP has a longer expiry date, (and CP in in-the-money but CO is out-of-the-money), but 6 months for CO is good enough for me. This is because it has CO has a higher gearing and effective leverage (gearing*delta)of 10.8 and 6.1 respectively. I also like its higher gamma (just being gibberish here).

Below is my tabulation of payoff for CO and CP at various prices of Mudajaya.

Mudajaya 2.50 2.58 2.85 2.90 2.95 3.00 3.23 3.69
CP -75.0% -55.0% 12.5% 25.0% 37.5% 50.0% 108% 223%
CO -100.0% -100.0% 4.2% 25.0% 45.8% 66.7% 163% 354%

Posted by kcchongnz > 2013-07-15 14:45 | Report Abuse

Pay dirt

Mudajaya call warrants

Posted by houseofordos > 2013-07-15 16:29 | Report Abuse

kc, please elaborate further on how IB manipulates the warrants or being the best market maker ?

Posted by kcchongnz > 2013-07-15 16:38 | Report Abuse

IB issuing the call warrant can press down the price of the underlying share the 5-days just before the settlement date. This will lower the settlement value of the call warrants. This can easily be done if the particular underlying share is illiquid. Not so easy for those big cap liquid stocks like Maybank because if IB sell with lower price, others especially institution investors can pick up if the price is undervalued.

IB, being cash rish can also jack up the price of underlying share long before the expiry of the warrant to entice retail punters to buy the call warrants. After selling the call warrants they withdraw support for the underlying share and buyers of those call warrants lose money.

A good market maker should provide fair prices for the warrants. The bid-ask spread should not be wide. He should always provide this good market making prices all the time so that there is liquidity.

Posted by pathew > 2013-07-15 16:52 | Report Abuse

bro kc, wah early this morning put coverage on mudajaya, now already up like crazy....

Posted by kcchongnz > 2013-07-15 16:56 | Report Abuse

Hi pathew, long time no see. Where did you hide?

No lah, it is not from me. It was houseofordos who put it up. Must thank him. I was just commenting only.

Shih, if not someone going to badmouth me here also.

Posted by tonylim > 2013-07-15 17:03 | Report Abuse

I did bad mouth eh eh..about the price of mudajaya. Shit what a coincidence, it perked up today.

Posted by houseofordos > 2013-07-15 17:28 | Report Abuse

the s..t thing is I didnt manage to pick up the CO... aiyo... already up 17%

Posted by apprentice > 2013-07-15 18:18 | Report Abuse

house, sorry to hear you missed the boat, cp is a good buy. btw maybe you like to look at supermax cm, I went in at 3 sen last week, its 4.5 sen now

Posted by pathew > 2013-07-15 20:57 | Report Abuse

Bro kc, been here, just not in threads you might fine appealing FA wise...:)
Btw, could you share the FA calculator you sent to some of the others before?

Would be nice to keep in touch with you too :)

Posted by kcchongnz > 2013-07-16 05:06 | Report Abuse

pathew, that is not a calculator. That is a messy spreadsheet of financial statement analysis and valuations. I have sent to about 150 people but only a handful find it useful. So I am not sure if you want. If so give me your email.

Posted by mansor80 > 2013-07-16 08:44 | Report Abuse

bro kc, can you please forward to me the spreadsheet of financial statement that you are using to analysis... thanks in advance. my email; jebat_jb@yahoo.com

Posted by pathew > 2013-07-16 17:21 | Report Abuse

thanks bro kc :)
might try it out on some stocks, although there's a lot of accounting terms i'm not familiar with... will feel my way around

perhaps you could share whether those highlighted are ok or not too :)

Posted by kcchongnz > 2013-07-18 12:13 | Report Abuse

A good day for punters of call warrants. Call warrants of Maybank, Bursa, AirAsia, Mudajaya,MISC etc. Punting is not such a dirty word after all, or once a while.

Posted by tonylim > 2013-07-19 00:36 | Report Abuse

kcchong, bursa. tink tink

Posted by kcchongnz > 2013-07-19 05:47 | Report Abuse

tony, you were the one who first have interest in Bursa call warrants. When you asked me about punting on them, I gave you a positive response. So did you punt and make a lot of money from them? You would have because a couple of them have gone up by close to 100% since then (2 weeks ago?), for example C4, form 8 sen to 15.5 sen now. I must thank you as I made some from CZ and C4.

Btw, I sent you the spreadsheet for call warrants, you never even acknowledge receipt. Was it like other stuff you asked me to sent, and then you just left it in the dustbin?

And if you have received it, did you look at it all, or just for the fun of asking? And if you have looked at them, have you made use of them to scout for good warrant to punt? Willing to share with us which ones have you discovered?

Disclosure: Punting call warrants is gambling basing probability. Punt at your own risk.

Posted by akuree > 2013-07-19 06:20 | Report Abuse

Hey...juzt want to know....yesterday,cliq, malton and its warrnt fly like a bird...is that any sign the price will deop?? Or it is juzt a big shark try to put the price high so that the small chick like us and the contra player will buy the counter....then when the price on the top the big shark will swll all the share to make profit and the price drop like a waterfall....with a panic sell....can someone share opp with us coz new player like me need a lot of advce from sifu2 outside thr....

Posted by tonylim > 2013-07-19 06:43 | Report Abuse

Mr Chong, good morning.
Yes I received it, when through it. A bit complicated for my limited time studying. I meant to ask you some q, still on my table and in my draft box. Have not have any stocks in mind yet, had wanted to try out the only cw on KPJ. Distracted by the movement yesterday.
Already acknowledged receipt.

Posted by kcchongnz > 2013-07-19 07:45 | Report Abuse

akuree, at least you are aware of what could be happening and willing to ask. Many don't.

I don't know anything about Clig. It sounds like you just need to click some buttons and huge profit is on the way. I heard a famous blogger recommending it in myfm a month ago, and probably many analysts also strong recommending it. And everyday, it appears to be one of the top volume. So because of that i avoid it.

Is it a oil and gas stock which just public listed at about 70 sen with free warrants, its share price plus warrants have already risen quite substantially till now still hasn't discovered any oil yet?

Malton? Heard many positive recommendations before, but when I looked at its financials, it was not exciting to me.

I may be wrong about what i have said, especially their stock prices (oh no, I didn't talk about their stock prices but just fundamentals). You don't have to listen to me. Below are some famous sayings for you reading if you are interested.

“The individual investor should act consistently as an investor and not as a speculator.” Ben Graham

• A friend of mine decided to get into the stock market and called his broker. “Buy me 10000 shares of XYZ.” And sure enough he bought and the price went up. He says, “This is great. I’m making money.” He picks up the phone three days later. “Buy me another 10000 shares.” The price goes up again. And this goes on for weeks and the price is mounting and he’s building a huge block of stock in his portfolio. My friend says, “You know, I have gotten to the point where I don’t want to be too greedy. I want to sell.” He picks up the phone, once again to call his broker. He says, “Jim, I’ve had enough. I want you take all my stock and sell it.” The broker responds, “To whom?” Jack Bogle

• The greater-fool theory: The notion suggests that there will always be a greater fool to buy from you what you yourself purchased at far too high a price. Alas, at market tops, all fools have bought, so there’s no new fool to bail them out.

• Painting the tape: Professional investors frequently banded together to generate action in the selected stocks. They would aggressively bid up the price of a company’s share, making the price trend look better than it would otherwise have been. The pros would then entice the public to get in on the action. As the public chased the rising stock with reckless abandon, the pros would abandon the stock, leaving it to fall sharply. They made a tidy sum while the public got bagged.

Posted by divine > 2013-07-19 07:59 | Report Abuse

The last paragraph is a GREAT reminder and wakeup call duirng this bull run.

Posted by divine > 2013-07-19 08:00 | Report Abuse

Mr Chong what are your thoughts on sumatec's current price

Posted by kcchongnz > 2013-07-21 11:53 | Report Abuse

Is buying Maybank CW a punting (gambling) or speculating endeavour?

Gambling involves taking a risk when the odds are against you; e.g. betting on a lottery or playing a slot machine.

Successful speculation implies taking risks when the odds are in your favour; e.g. a good mah-jong player.

At the close of Bursa on 21 July, 2013, Maybank share is at RM10.64 while one of its call warrant CW is at 29.5 sen. CW has the following profile.

Warrant Price Ex-Price Ex-Ratio Expiry date Premium Gearing
CW 0.295 9.000 5.000 30/09/2013 -1.6% 7.2

The table below shows the profit/loss at the expiry of CW on 30 September 2013 base on the above.

Maybank Price 8.51 9.04 9.58 10.11 10.64 11.17 11.70 12.24 12.77
Gain in Maybank -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0%
Gain in CW -100.0% -97.0% -60.9% -24.9% 11.2% 47.3% 83.3% 119.4% 155.5%

It shows the loss/gain in CW for increments of 5% percentage changes of Maybank share price in both directions from its present price of RM10.64 now.

When Maybank share goes up or down by 5%, CW gains 47.3% or loses 24.9% respectively. When Maybank share goes up or down by 15%, CW gains 120% or loses 97% respectively.

Please also note that one can sell CW any time before expiry, and not necessary to hold it until maturity.

So do you think buying Maybank CW now is a speculating or a punting (gambling) activity?


Disclaimer: This is not a post to entice anyone to dabble in call warrants.

Posted by tonywong > 2013-07-21 11:58 | Report Abuse

will it be profitable to buy at the current ? thanks

Posted by kcchongnz > 2013-07-21 12:11 | Report Abuse

tonywong,
stay out of this call warrant thingy until you have enough knowledge of this stuff. My posting is for education purpose.

Also i3 is a hazardous place for you to get advice of what stocks to buy (read your the other post claiming yourself a newbie), unless you have enough knowledge about reading and interpreting financial statements to check all those so-called recommendations.

Just an advice. You don't have to follow.

Posted by tonylim > 2013-07-22 01:14 | Report Abuse

.

Posted by tonylim > 2013-07-22 12:45 | Report Abuse

kow chye, bursa cw, take profit?

Posted by houseofordos > 2013-07-24 14:06 | Report Abuse

anyone looked at TM-CY ? Looks like the most attractive one

Posted by wm83 > 2013-07-25 10:41 | Report Abuse

this thread mati mati

Posted by kcchongnz > 2013-07-25 12:08 | Report Abuse

Yes, you can buy TM CY at 10 sen now. With the underlying share at 5.28, the premium is just 5.1%. It still has a long life until end of February next year. Further more the gearing is good at 18 times. Good punt.

Price Ex-Price Ex-Ratio Expiry date Premium Gearing
CY 0.100 5.25 3.00 28/02/2014 5.1% 18
CT 0.020 5.179 4.751 31/07/2013 -0.11% 56

Actually if you are a risk taker, CT offers more excitement. It is expiring end of this month, 5 more days to count. Meaning the price of TM share is taken into settlement calculation right now. You can buy CT at a discount at 0.11% at 2 sen.

Don't think a discount of a fraction of a sen is nothing. In this case, it matters a lot because the gearing is 56 times. Below is the gain and loss buying CT at 2 sen now for various 5-day average volume weighted prices of TM at settlement.

Uly Price 5.24 5.26 5.28 5.30 5.32 5.34 5.36
TM -0.8% -0.4% 0.0% 0.4% 0.8% 1.1% 1.5%
CT -35.9% -14.9% 6.2% 27.2% 48.3% 69.3% 90.4%

Before you punt, please read the following article first.

http://klse.i3investor.com/blogs/kianweiaritcles/33653.jsp

Posted by houseofordos > 2013-07-25 12:45 | Report Abuse

KC, thanks. I dont think I m going to bet on CT.. haha too much risk for me... heart attack :)
For call warrants (european style), have you ever held them till settlement before ? Suppose warrant is in the money, does it mean that to realize my gain if I keep till settlement date, I have to convert all the warrants to mother by settlement date or lose everything ? Or do you normally sell before the settlement date ?

Posted by kcchongnz > 2013-07-25 13:08 | Report Abuse

house, you better stay away from call warrants. You still have a lot to learn about them.

Sorry, just kidding, I know you will learn fast if you want. But seriously you have a lot more to know before you punt, yes gamble, with call warrants.

Yes, I held call warrants to maturity quite often. Those were because they have value when they are very closed to maturity, like CT now. Note that you can't do anything the last three days before maturity, no trading. You are at the mercy of the share price of the underlying share for the last 5 days.

Call warrants are cash settled at maturity with the investment banks if you opt to hold them until maturity, no conversion, nothing to do with the company.

A call warrant is in-the-money if the underlying share price is above the exercise price of the call warrant. It doesn't mean you are at a gain because you have a cost or premium over holding it.

It is best to sell the call warrant before settlement date, whether to realize your gain or losses because you have no control in the last three days before expiry. Those times I hold them because I couldn't get the price I wanted.

Posted by BBB79 > 2013-07-25 13:16 | Report Abuse

call warrant really suck...keep away from it..

Posted by houseofordos > 2013-07-25 13:19 | Report Abuse

ok... thanks for the explanation and correcting some of my terms... so for the -WA types of warrants, are these the ones that have to convert to mother share upon expiry ?
and then thre are also the put options (-Hxx).. i read that its suppose to hedge on the downside risk.. not really clear on that or at least how they work in KLSE.

haha.. dont worry about me... I wont blame anyone if I lose money.. sometimes learning also need to pay some tuition fees... actually i ve already made some profit following the analysis on Maybank-CW.. with proper risk management, should be OK la...

Posted by kcchongnz > 2013-07-25 13:34 | Report Abuse

Posted by BBB79 > Jul 25, 2013 01:16 PM | Report Abuse
call warrant really suck...keep away from it..

BBB79, you are absolutely right again. Notice that I just posted the link below to warn people punting call warrants?

http://klse.i3investor.com/blogs/kianweiaritcles/33653.jsp

But actually trading and punting call warrant is not much different, both also chasing the share price, and not the value of a company like investing.

But sometimes when trying to make money, what is comfortable is rarely profitable. Take for example the Maybank call warrant CW mentioned by our friend house above. I first talked about it here in April 25, see post below. It was just trading at 11 sen only then. Look what is its price now just after exactly 4 months. You can sell at 30 sen now.


Posted by kcchongnz > Apr 25, 2013 05:06 PM | Report Abuse X

At today's closing of Maybank at 9.55 and CW at 11 sen, there is no premium to buy CW, and Maybank has just ex its dividend. This means that if you were to settle the call warrant now, you don't lose anything if you have bought CW at 11 sen today. But there is still 5 more months before CW expires. Lets for the time being ignore the advantage you can buy and sell CW before it expires. What do you think will be the price of Maybank in 5 months time when you settle CW?
Below is your gain/loss at various prices of Maybank at expiry of CW.

Maybank Price 9.000 9.400 9.550 9.600 9.800 10.000 10.500 11.000 11.500
Gain in Maybank -5.8% -1.6% 0.0% 0.5% 2.6% 4.7% 9.9% 15.2% 20.4%
Gain in CW -100.0% -27.3% 0.0% 9.1% 45.5% 81.8% 172.7% 263.6% 354.5%

So what do you think is the probability of making money on CW at 11 sen now?

Posted by houseofordos > 2013-07-25 13:40 | Report Abuse

Posted by houseofordos > Jul 25, 2013 01:19 PM | Report Abuse X
ok... thanks for the explanation and correcting some of my terms... so for the -WA types of warrants, are these the ones that have to convert to mother share upon expiry ?

I think the -WA types can be converted to mother anytime if I m not mistaken.. this is why there is always a dilution effect on the earnings which needs to be accounted for if warrants are converted to mother and results in larger share base

Posted by kcchongnz > 2013-07-25 13:53 | Report Abuse

house,
put warrants is also issued by ib and it is european style cash settlement. Just that the bet is the other way, betting the underlying share price to go down, not up. put warrants not common and not popular in Bursa.

Those company warrants like Wa, Wb, Wc etc are issued by companies. they have longer expiry date. They are American style options, that you can convert to the underlying share any time before expiry. If you hold until maturity, you must have a lot of cash to convert to the underlying shares.

Posted by houseofordos > 2013-07-25 14:22 | Report Abuse

OK tqvm for the clarification

Posted by kcchongnz > 2013-07-26 10:57 | Report Abuse

Wow, punting TM CT is really exciting. with an effective leverage of 45 times, 4 more days to expiry, each sen of movement of TM share results in a difference in 10% difference in payoff for CT.

Aiseh, no call warrant kakis here to shout "picture", "picture", "picture" together.

Posted by fatinvest > 2013-07-26 11:23 | Report Abuse

Uncle Chong, where to read up on this call warrant thing? Dare not jump into the water before learning how to swim la.

Posted by BBB79 > 2013-07-26 12:01 | Report Abuse

kcchongnz, no knowledge on call warrant, last time buy 1818-cu bursa-cu, lose already, even 1 cent also no repay, haiz...take the lesson...

Posted by kcchongnz > 2013-07-26 14:30 | Report Abuse

BBB79, i do agree with your previous post below:

Posted by BBB79 > Jul 25, 2013 01:16 PM | Report Abuse
call warrant really suck...keep away from it..

Buying call warrant is really gambling, full stop. When you gamble, you must know the game very well. Even knowing the game well may not be good enough to make money because the playing field is uneven. You must know who your opponents are.

Having said that punting call warrants offer good reward, if you know you are at an advantage when the market offers you. You go for it.

For example playing black jack and you first get 2 Aces, you would want to split them and call for a card each. Your chance of getting black jack is high as there are many pictures in a deck.

But when you don't know about the game, follow your instinct, avoid it.

My postings on call warrants are never for enticing anyone to buy call warrant. but more for fun.

Posted by BBB79 > 2013-07-26 17:24 | Report Abuse

kcchongnz, really curious what share you eye on it, mind to share ?

Posted by tonylim > 2013-08-05 17:22 | Report Abuse

kcchong, i wish i had mentioned to you about BIMB cw.
I dont had time to look at it whole day

Posted by kcchongnz > 2013-08-05 17:28 | Report Abuse

tonylim, your fault, made me lose the chance of making money.

Posted by tonylim > 2013-08-05 18:14 | Report Abuse

Darn wished I had taken the seller this am

Posted by tonylim > 2013-09-03 17:49 | Report Abuse

..

Posted by penunggu > 2013-09-03 18:39 | Report Abuse

...

Posted by kcchongnz > 2013-11-25 12:18 | Report Abuse

Posted by nightshade > Nov 25, 2013 11:29 AM | Report Abuse

Maybank-C2, gearing > 40, expiry next year June, ratio 5:1

strike at RM 10.50....it is possible in my view....

Gearing will reward you very well provided you are right about the direction of the underlying. Gearing cuts both ways. I prefer a safer bet on CY, gearing lower at 10 times but it has better chance of positive return as the underlying share just needs to go up by 1.2% within the expiry time of 3 months for me to make money. Unless you are very positive about the underlying share price going up more than 10% in 7 months time, then C2 may be more exciting.

It is a matter of risk reward ratio and a game of probability.

Warrant Price Ex-Price Ex-Ratio Expiry date Premium Gearing
C1 0.065 9.400 10.000 10/01/2014 3.2% 15.0
C2 0.050 10.500 5.000 30/06/2014 10.4% 39.0
C3 0.055 10.500 8.000 22/07/2014 12.3% 22.1
C4 0.080 9.500 12.000 24/10/2014 7.4% 10.1
CY 0.240 8.900 4.000 28/02/2014 1.2% 10.1
CZ 0.170 9.000 6.000 21/03/2014 2.9% 9.5

Posted by nightshade > 2013-11-25 12:26 | Report Abuse

hahaha....that is quite an interesting analogy for the risk part....but the reward part?

Posted by FastMoneyMaker > 2013-11-25 12:30 | Report Abuse

All trading master, anyone have monitor Airasia-C4, can keep me some comment also teach me how's the conversion show like??? Thanks a lots.