Posted by sotsot1986 > 2015-01-07 11:53 | Report Abuse

what for you make so many hedge? you only can breakeven when the index go to 1540. If really wanna to hedge your portfolio, i suggest future is the most effective way.

Posted by murali > 2015-01-07 11:53 | Report Abuse

At the end you pay high premium to the issuers....

Posted by Icon8888 > 2015-01-07 11:55 | Report Abuse

all comments are welcome

irregardless of agree or don't agree

I am happy to hear your view

Posted by Steve Ong Wei Siang > 2015-01-07 11:58 | Report Abuse

too much hedging, too much transaction cost and spread. Buying call and put warrant together is effectively net long on volatility, now volatility is quite high, if it go down, the position will cause net losses.

Posted by murali > 2015-01-07 11:59 | Report Abuse

LPPL

Posted by cruger12345 > 2015-01-07 11:59 | Report Abuse

That is the silliest idea I have ever heard... FBMKLCI is base on the KLSE index if majority of the stocks in the portfolio are non index stock it will become irrelevant/non-correlated. If that is the case where is the hedge ? What if the index goes up and the stocks portfolio goes down ? Assuming that index is correlated to the non index stocks is silly.

Posted by murali > 2015-01-07 12:00 | Report Abuse

Just go for KLCI futures directly...instead of paying high spreads to the issuers

Posted by Icon8888 > 2015-01-07 12:01 | Report Abuse

wow, so far most disagreed...

Posted by Icon8888 > 2015-01-07 12:03 | Report Abuse

murali, futures had unlimited losses. You have to keep top up (if trend is against you). It is a bottomless pit

HG is different, my losses limited to the 27 sen I spent to buy one unit

I tried futures before, not easy to persist when losing money.

That was my experience lah. Yours might be different

Posted by murali > 2015-01-07 12:04 | Report Abuse

Make sense....limited downside and unlimited upside if you make a right bet...

Posted by murali > 2015-01-07 12:05 | Report Abuse

But dont buy big and small together lah...bear in mind you pay for the high spread...

Posted by Icon8888 > 2015-01-07 12:07 | Report Abuse

murali, nothing is perfect. I have to settle for the second best (namely, the put and call)

sometime in life, need to let people make some money (issuer premium that you mentioned) in order to benefit yourself

this is business mah

Posted by Alas Long > 2015-01-07 15:11 | Report Abuse

better hold 50% cash or more cash ...hedge this, hedge that, erm...not so efficient .

Posted by yktay1 > 2015-01-07 15:15 | Report Abuse

Those who buy when he reveals, say goodbye to your money.

Posted by trustme932 > 2015-01-07 15:19 | Report Abuse

Murali...pandai...

Posted by ahdi > 2015-01-07 16:24 | Report Abuse

FUTURE ALSO GOT SPREAD TRADING. YOU traded like that... who laugh at last ? your broker.. LOL

Posted by lepaklangkawi > 2015-01-07 16:38 | Report Abuse

thx icon. good ideas

nice to see PUT warrant for fbm-klci offered to MY public

not sure if ppl understand/appreciate benefit...

Posted by Icon8888 > 2015-01-07 16:53 | Report Abuse

Most don't understand the idea

They scoffed at the idea, without even pausing to think about the merit

Posted by Icon8888 > 2015-01-07 17:01 | Report Abuse

The article is pretty clear about the principle

Some more with illustration by figures and mathematics

Go read again

Posted by murali > 2015-01-07 17:01 | Report Abuse

To hedge yr portfolio with Hg make sense, but to hedge Hg with Cn is meaningless....

Posted by Icon8888 > 2015-01-07 17:04 | Report Abuse

Chew on it, try to digest it

Then come back and comment again

Posted by dragonking > 2015-01-07 17:04 | Report Abuse

if at centre,,,near expiry you loose all premium.

Posted by Fragrance House > 2015-01-07 17:07 | Report Abuse

your idea is like playing big and small on the gambling table. put 100 at big also put 100 at small to comfort yourself. In hokkien i think we will said it LPPL right? Coz when market high call warrant raise, your put warrant drop same as in different situation. Impossible both raise together right?

Posted by dragonking > 2015-01-07 17:07 | Report Abuse

Better if one direction,,then another to cover when hit support or resistant.

Posted by murali > 2015-01-07 17:12 | Report Abuse

U have to work out few scenarios such as CI closes at 1500,1600,1700,1800 to see whether your method make sense or not....still I think CN is meaningless

Posted by murali > 2015-01-07 17:14 | Report Abuse

I dont know why you wanna make your method so complicated....just stop at Hg if u wanna hedge against your portfolio

Posted by Icon8888 > 2015-01-07 17:18 | Report Abuse

What I am doing seemed ridiculous from you guys point of view. But it is a very basic concept in derivative finance

You can have put and call options in various combinations to help you to achieve your financial objectives. They came with names like Straddle, Butterfly, Strangle, Fence, etc

It is not contradictory to have put and call at the same time in your portfolio

Please do some research on your own, then you will be more receptive of the idea I presented in the article

Posted by Icon8888 > 2015-01-07 17:25 | Report Abuse

Go google Option Strategies

Then come back again to discuss or laugh

Posted by murali > 2015-01-07 17:27 | Report Abuse

Master icon888,maybe u can consider to hedge yr portfolio by shorting klci futures n then hedge klci futures by buying CN n then hedge CN by buying HG......sounds pro

Posted by murali > 2015-01-07 17:30 | Report Abuse

But can work or not is a diff issue....but it sounds pro.....ordinary people wouldn't uunderstand it.....

Posted by Icon8888 > 2015-01-07 17:30 | Report Abuse

Be open minded

It could benefit you

You are fine now, but when things turn sour, you are welcome to come back to this article and take a second look

Posted by Icon8888 > 2015-01-07 17:31 | Report Abuse

2015 is going to be very challenging

Not to be taken lightly

Posted by murali > 2015-01-07 17:33 | Report Abuse

Tqvm.besides even klci future is not a good hedging tools....it has drop abt 10% from its peak so far but most counters drop 40-50% from their peaks oredi....unless your portfolio are 30 klci index stocks

Posted by Icon8888 > 2015-01-07 17:33 | Report Abuse

I been through 1997

I know what real crisis is like

Posted by murali > 2015-01-07 17:36 | Report Abuse

U think you alone gone thru 1998?friend, still it has nothing to do with your above hedging method

Posted by Icon8888 > 2015-01-07 17:37 | Report Abuse

That is why I keep asking you to go and read my article and try to digest it.

I mentioned in my article that the hedging is to prepare for financial meltdown

The Index components might not be directly related to my small cap stocks, but the put will allow me to preserve value and reinvest when the entire system tanked

As I keep saying, go read first, then we can have meaningful talk

Posted by crossroad > 2015-01-07 17:37 | Report Abuse

I was told that if a small bear, a 20% drop from peak can be expected. Individual stock can drop 80% so no play one. Anyway, I am buying KLCI puts, just aim to make 20% to 40% to reduce my losses.... see how.

Posted by murali > 2015-01-07 17:39 | Report Abuse

The klci.now is consisted of 30 stocks while it consisted of 100 stocks in 1998....correct me if I m wrong....so how effective shorting klci future will hedge against your portfolio??

Posted by lepaklangkawi > 2015-01-07 17:39 | Report Abuse

aiyo. sometimes i wondering why ppl msg i3 if so close-minded wan....

maybe you have better way mr Grumpy murali?

Posted by Icon8888 > 2015-01-07 17:40 | Report Abuse

Crossroad, the objective is not to fully cover

But to find a plank in the ocean when everybody else around you is drowning

Posted by murali > 2015-01-07 17:41 | Report Abuse

I oredi mentioned few times hedging with Hg make some sense...but hedging HG with CN is funny....work out few scenarios on the closing of klci comes Nov may help you to see a clearer picture

Posted by crossroad > 2015-01-07 17:42 | Report Abuse

All depends how you read the market... I have cleared my rubbish stocks, and have kept stocks whcih drop to very cheap valuation and/or have good underlying business - so no heart to cut dy. But price of these stks can still drop la, thats the reality. Buying Puts is a hedge, because, if the CI drop my puts would be in the $ and help to make good losses in my physical stocks. And vice versa.

Posted by Icon8888 > 2015-01-07 17:43 | Report Abuse

murali The klci.now is consisted of 30 stocks while it consisted of 100 stocks in 1998....correct me if I m wrong....so how effective shorting klci future will hedge against your portfolio??
07/01/2015 17:39


(1) just wait until things are real bad, there is no such thing as artificial support. That is why I said you been through 1997 without really understanding it. If you understand it, you won't make such statement
(2) if you are right about Index can be manipulated (I am actually on same page with you), then my call option will kick in

Now you know why I add the CN ?

Posted by crossroad > 2015-01-07 17:44 | Report Abuse

Icon, agree cannot expect to fully recoup.. in a market that is so bearish, the odds of the KLCI falling further seems much higher than it going up hence the put warrants come in handy.

Posted by murali > 2015-01-07 17:44 | Report Abuse

Lepak, if u are bearish just short klci futures n preserve more cash.....simple....

Posted by Fragrance House > 2015-01-07 17:44 | Report Abuse

Yes, unless both put and call warrant you buy at lowest price. Then i think you idea abit make sense. Like when KLCI 1800 point that time no ppl bother about put warrant and it seem in up trend thats y put warrant damn cheap. If you buy at that time, now you shall laugh all the way to the bank. While izit mean now down trend we can catch low price call warrant? The risk is up to different ppl. When no body buying put warrant that time most ppl think KLCI will be up trend all the way now will they think KLCI will drop all the way? Decision make by own.

Posted by Icon8888 > 2015-01-07 17:46 | Report Abuse

Crossroad, what you are doing, I am fully practicing it

I hold 70% cash,

invest in low PE, strong balance sheets, high dividend stock

I focus on export oriented counter to insulate from local problems

I buy call, I buy put

I don't know what else I can do

Posted by murali > 2015-01-07 17:48 | Report Abuse

Sorry....dunno why u wanna hedge HG with CN.....if u are so worried on the loss of yr HG in case u read the MKT wrongly....buy less HG loh....

Posted by Icon8888 > 2015-01-07 17:49 | Report Abuse

Fragrance, my call is low price, I have to admit my put is expensive.

But I have no choice, I have to have the put

Posted by murali > 2015-01-07 17:50 | Report Abuse

So if u are worried that u may suffer loss in CN then would u consider another put warrant to hedge so....it will be endless....