BFM Podcast
Are All Warrants Created Equal?
The Morning Run Crew
28-Jan-15 13:35
Today on Warrants Wednesday, we welcome a special guest to talk about whether all the FBMKLCI call warrants are trading equally, as well as a brief look at the put warrants.
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yes the host don't even know what warrants are in the first place. They failed to question the unlevelled playing field offered by the exchange and its issuers. No wonder most warrants ended up zero value @ the date of expiry. If only issuers are fair in their conversion exercise pricing with 1:1 ratios. Over here ration are ridiculously impossible. Take for example FBMKLCI -HG the ration is 667:1 @ 1800 which gives one a intrinsic value of 0.005c even if the index crashed to 1600 on the day of expiry one would only get back 29c and how fair a trading deal could get? No wonder everyone is shying away from these instruments. Ive yet to see a good and fair deal offered by issuers of these warrants.
2015-01-29 14:16
the options market in US is an example of what a transparent, fair and active market should be. In most cases the laws of demand and supply controls the pricing. And each call or put options tracks the underlying stock closely. This is bcoz all the exercise pricing is favourable to both call or put players. The premium is all determined by market forces. There are no stupid conversion ratios too.
2015-01-29 14:22
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Wong Heam Kiew
Both the host and guest dun know much about structured warrants, never talk about the fair value, talk only the premium, what a joke!
2015-01-28 16:34