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

Icon, if you are 70% cash, you are very covered with your strategy lah.. I am looking at HI, the way the Issuer is holding tight to their stash seem to suggest that Macquarie thinkin CI is going down more than recovering? I have not cleared my stocks because I fell into the value trap - all good FA stocks cannot let go. This will be my first bear - will review my options

Posted by Icon8888 > 2015-01-07 17:52 | Report Abuse

I structure the CN so that even a total loss will be not painful (losing RM54,000 Put is painful. But I am ok with losing RM24,000 call. It is considered acceptable for me)

Did I answer your question ?

Posted by murali > 2015-01-07 17:54 | Report Abuse

What if klci closes at 1800 in Nov?

Posted by murali > 2015-01-07 17:54 | Report Abuse

Or 1700? 1600?

Posted by Icon8888 > 2015-01-07 17:55 | Report Abuse

murali 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....

--------

If I buy too little HG I cannot effectively hedge my portfolio mah...

Still confused ?

Posted by murali > 2015-01-07 17:56 | Report Abuse

I started to see your logic...but I think it will be good if u work out few scenarios to study first

Posted by murali > 2015-01-07 17:58 | Report Abuse

What if klci closes in between 1600-1800 then u may find your hedging not effective

Posted by Icon8888 > 2015-01-07 17:58 | Report Abuse

At 1800, my CN is likely to be doing very well (I bought them at 6 sen when index is 1710)

My put will likely be fxxked

But the profit from the call help to make the losses from the put less painful

Now do you still think my CN is stupid ?

Posted by murali > 2015-01-07 17:59 | Report Abuse

At 1600 or 1700?

Posted by Icon8888 > 2015-01-07 18:00 | Report Abuse

Also, if index can stay at 1800, that means the market not tanked loh

That means my equity portfolio will be very likely generating profit loh.

The gain of my equity and my CN will more than cover the losses from the put loh

Posted by murali > 2015-01-07 18:02 | Report Abuse

Just like you go genting u buy rm100 big n rm50 small.....when it opens small u happy u lose rm50 only....if it opens big u happy u make rm50.....

Posted by murali > 2015-01-07 18:02 | Report Abuse

So the rm50 small is a good hedging for your happiness....

Posted by murali > 2015-01-07 18:03 | Report Abuse

Big u happy small u also happy

Posted by Icon8888 > 2015-01-07 18:05 | Report Abuse

If index stays at 1700, both the put and the call is supposed to stay at current level except that time will be running out. And that is not good for my call and put. So I need to watch the timing carefully

But by that time, the effects of the low oil price and RM would have manifested themselves, so I would have a better picture on what is the nest step to be taken.

If the economy and financial systems shows signs of stabilization, then I might want to exit both call and put. In the process of doing so, I might lose half the value of the put and call. But it is ok. It is an insurance fee paid. My portfolio will be intact

Posted by F22Raptor > 2015-01-07 18:05 | Report Abuse

icon u r playing straddle.

Posted by Icon8888 > 2015-01-07 18:06 | Report Abuse

If index 1600, my RM54,000 Put will shine. I will lose my RM24,000 Call

I am ok with that

Posted by murali > 2015-01-07 18:08 | Report Abuse

Bro,most importantly u are happy...its priceless

Posted by Icon8888 > 2015-01-07 18:08 | Report Abuse

Still confused ?

Posted by F22Raptor > 2015-01-07 18:10 | Report Abuse

there is an options strategy called 'straddle'.

Posted by murali > 2015-01-07 18:10 | Report Abuse

Work out the figures to see the overall impact....

Posted by Icon8888 > 2015-01-07 18:26 | Report Abuse

Another possibility is that if the index staged a minor rally (since you and I both believe that the 30 stocks are "cornered". I happen to also believe that they are positively biased), my CN runs to let's say 12 sen, I might consider locking in the gain by fully exiting CN. With the RM24,000 profit (6 sen x 400,000), I will bring down my HG cost from RM54,000 to RM30,000, which will equal 15 sen cost per HG (instead of 27 sen now). Then I will hold on to the put until expiry. In that case, losing even all of it will be less painful

There are many possibilities. But first of all, you need to have an open mind

Cheers

Posted by murali > 2015-01-07 18:29 | Report Abuse

My mind is open....having a diff opinion with you don't my mind closed loh

Posted by Icon8888 > 2015-01-07 18:31 | Report Abuse

And like Lepak said, don't be so grumpy

Smile a bit lah

Posted by murali > 2015-01-07 18:31 | Report Abuse

Have u ever consider hedging yr CN with another put warrant?

Posted by Icon8888 > 2015-01-07 18:32 | Report Abuse

Crazy meh...

Posted by murali > 2015-01-07 18:32 | Report Abuse

I love brain storming lah..where got grumpy....

Posted by murali > 2015-01-07 18:32 | Report Abuse

Why u think that's a crazy idea?

Posted by murali > 2015-01-07 18:34 | Report Abuse

Hedging HG with CN is smart but hedging CN with another put warrant is crazy???

Posted by Tornado > 2015-01-07 18:37 | Report Abuse

As confuse as confucious

Posted by Icon8888 > 2015-01-07 18:42 | Report Abuse

@murali

I hedge the HG with the CN. But I left the CN naked, because CN is relatively small (at RM24,000) and I can stomach the loss

Hedge big position don't hedge small position

Posted by murali > 2015-01-07 18:46 | Report Abuse

Do u realize the spread u are paying for each cw?do you realize that at 1800 comes Nov, both yr HG n CN may worth zero?

Posted by wwwcomment > 2015-01-07 18:49 | Report Abuse

murali Just like you go genting u buy rm100 big n rm50 small.....when it opens small u happy u lose rm50 only....if it opens big u happy u make rm50.....

07/01/2015 18:02

murali So the rm50 small is a good hedging for your happiness....

07/01/2015 18:02

murali Big u happy small u also happy



Hahaha. Good one. Happy ending.

Posted by murali > 2015-01-07 18:51 | Report Abuse

Most importantly u are happy whether u make or don't make money.....cheers

Posted by wwwcomment > 2015-01-07 18:54 | Report Abuse

Seems like the goal now is not make money. The goal now is to not lose a lot money. Very powerful investment strategy.

Posted by Icon8888 > 2015-01-07 19:17 | Report Abuse

Spot on wwwcomment, you seemed to get the essence of the whole thing

Posted by wwwcomment > 2015-01-07 19:18 | Report Abuse

Like.

Posted by murali > 2015-01-07 19:49 | Report Abuse

Buying HG at 0.28 now is like paying around 100 points of spread...around 1610

Posted by Icon8888 > 2015-01-07 19:53 | Report Abuse

Few thousand ? It should be RM30,000 x 2 = RM60,000

Any way, as mentioned in my article (have a you read my article or not ?), I am not bothered by 200 points drop to 1,500. That is a correction, not a meltdown. My export stocks Poh Huat, Lii Hen, etc shouldn't fare too badly (please read my other blog articles)

It is fine if HG doesn't shine at 1500. It doesn't bother me (again, please read my article)

I don't need it to shine at 1500

Posted by lepaklangkawi > 2015-01-07 19:54 | Report Abuse

not sure you're understanding these euro style structured put warrants

spend some time reading on investopedia mr grumpy, then try again

sound very newbie-ish mr murali

Posted by Icon8888 > 2015-01-07 19:57 | Report Abuse

@murali

You are right, buying HG now at 28 sucks

But don't buy even sucks more (heavy storm cloud ahead. I scare mah)

To reduce the suckiness, CN comes in loh.

It is ying and yang, when HG is pricy, CN is cheap

So I am using the yang to offset the ying

Posted by Icon8888 > 2015-01-07 19:58 | Report Abuse

Lepak please press Like

Posted by murali > 2015-01-07 20:00 | Report Abuse

Icon888, at CI 1500, u make (1800-1500)/ 667= 0.449 minus 0.28 (price today)= RM0.149 X 200,000 = Rm298K from HG, but you lose RM24K from CN, so you still make few thousands...

Posted by CFTrader > 2015-01-07 20:01 | Report Abuse

Icon8888, you definitely have a good calculation mindset. I am very impressed with your strategy.

Posted by Icon8888 > 2015-01-07 20:02 | Report Abuse

@murali

Oil turned positive now (up few cents, recouping all loss ground incurred this afternoon).

If I don't have CN, I will freak out now

But with CN, I Lepak only

Posted by Icon8888 > 2015-01-07 20:03 | Report Abuse

Thanks CF trader.

Posted by murali > 2015-01-07 20:04 | Report Abuse

Sorry should be RM33.9K gain from HG if CI at 1500...

Posted by murali > 2015-01-07 20:04 | Report Abuse

Then minus total loss of RM24K from CN, should be gain ard RM9.9K

Posted by Icon8888 > 2015-01-07 20:06 | Report Abuse

@murali

-------
Icon888, at CI 1500, u make (1800-1500)/ 667= 0.449 minus 0.28 (price today)= RM0.149 X 200,000 = Rm298K from HG, but you lose RM24K from CN, so you still make few thousands...
-------

Got to factor in the premium mah. Market now give the Put 17 sen premium

So I pro forma add it in loh.

You can complain that I am being aggressive, but it can work out that I am actually being conservative

If people freaked out big time, they will go hysteria and pay big premium

There are many very scared people out there leh, my friend

Posted by murali > 2015-01-07 20:06 | Report Abuse

Lepak, look forward to your comment on Icon8888's above hedging method...TQ

Posted by murali > 2015-01-07 20:07 | Report Abuse

Do you think the Issuer will still give you 100 points spread comes Sep/OCt/Nov??