Posted by passerby > 2013-04-25 17:26 | Report Abuse

lol, i'm not oracle, cannot answer you that :) but i do hold Maybank mother shares for years already, even until now still keeping.

please be reminded, buy & hold don't work well for CWs.

in my personal opinion, the market maker is doing a lousy job/screwing up the market making activity currently for this CW. the traders got a lot of chances to make money from the movement of the mother share but was denied by market maker because they just don't give a damn to buy back the CW with sufficient volume

Posted by kcchongnz > 2013-04-25 17:33 | Report Abuse

I think you better go and find out in details what drives option prices. No doubt liquidity and active participation of market maker is important, but it is just a part of it only, which to me is a small part. It is just like buying value illiquid stock, which price has to eventually close up with the value of its business. Call warrants is even better, investment bank has to settle the undervalued call warrants at expiry date, which unlike stocks, undervalued stocks can stay undervalued for a long time.

Posted by passerby > 2013-04-25 17:47 | Report Abuse

it is the price movement of the underlying....but i just don't buy & hold for next 5 months

the historical failure rate for buy & hold just too big & i paid a heavy tuition fees for that before. Not going to repeat the same mistake

previously for Sime-CR, did you buy & hold until expiry ? what is your result for Sime-CR coz i see it as competitive as current Maybank-CW ?

Posted by kcchongnz > 2013-04-25 18:00 | Report Abuse

I bought and sold Sime CR a number of times. At last I also hold Sime Cr to expiry, no choice because the underlying share price dropped. Lost some money overall. It was just part of the game, a probability game that Sime share price dropped or didn't go up for a long period of time and holder of its warrants lost money.

Of course if Maybank share behaves the same as Sime, holders of warrants won't make money, and in fact would lose money if the share price dropped and less than its present price in 5 months time. But again it is the probability game. The more likely scenario is Maybank share should go up by say 4-5%, taking in considerations that share price goes up by about 10% a year. Don't forget that you also have the big advantage of you able to sell it any time between now and expiry; and Maybank share price has a high probability that it is above the present price at least for some time before the expiry of CW.

Posted by kcchongnz > 2013-04-25 18:06 | Report Abuse

The major issue is with 5 more months to expire and a good punting gearing of 18, you still can get the warrants at no premium. The volatility of Maybank is high too and that makes the warrant valuable. Furthermore, it is not easy for investment bank to manipulate the mother share price because of its high liquidity.

Posted by passerby > 2013-04-25 18:30 | Report Abuse

there you go "you also have the big advantage of you able to sell it any time between now and expiry" - the matter is, if you cannot sell to realize the gain, it is meaningless

this is data I checked from market making disclosure by CIMB dated 2nd April 2013:http://www.bursamalaysia.com/market/listed-companies/structured-warrants/1244825

MAYBANK-CW 1155CW 50,000,000( issued size) & 18,828,800 ( issue not held by IB) @ 37.66%. The high % of public circulation is showing that market maker is about to lose control on the market making activity.

you got approximately 19 players holding 100,000 units each trying to outdo each other & market maker

the above not including this month selling by Maybank IB.

this CW is definitely not my choice of playing but I do hope the underlying move up & market maker is going to do a better job so that those playing can realized the gain :)

Posted by kcchongnz > 2013-04-25 20:10 | Report Abuse

I bought 50000 shares of Maybank CW this morning at 10 sen. There were 2741400 shares bought and 1.985,000 shares of CW sold for the whole day. The price was between 10 sen and 10.5 sen for most of the day until later in the afternoon, price went up to 10.5 sen, and I sold off my share at 10.5 sen. It closed at 11 sen. At the close, there were 1730,000 shares bid and 660100 shares asked at 10.5 sen and 11 sen respectively. So is it so difficult to sell the shares?

The price of CW goes up and down not because the active participation of market maker, but the rise and fall of the underlying share, ie Maybank share price. The buying and selling may not necessary done by the issuing bank. They are supposed to hedge the movement of the underlying and warrants, delta hedge, gamma hedge and whatnot and hence they are supposed to be neutral in the up and down of the share prices. The buying and selling could have been carried out mostly by the market participants. The market maker comes in only if there is no market participant, to make the market. If the underlying share price keeps on going up to more and more discount, punters will come in drove to buy the warrants because there is very high probability of making money, whether the market maker buy up the shares or not.

Posted by kcchongnz > 2013-04-25 20:14 | Report Abuse

Even if there is no market participant, the market maker have to revise upwards the bid and asked price when the underlying share price keeps on going up, though the bid asked spread may be wide.

Posted by passerby > 2013-04-25 22:28 | Report Abuse

You bought at 10sen & sold away at 10.5sen. lol, why don't you wait till it command a premium deem reasonable ? 3~5% reasonable ? :) it is an indication how competitive is the current environment.

:), not hard to sell away but very very hard to sell at price deem fair with premium for 5 months. so what is the premium you think is fair for this CW with 5 months life span? 3%? 5%? why still cannot command a minimum premium? isn't it not because too many players around ? :)

the reason why the CWs is selling at almost 0% because I believe most of traders aware that market maker will only buy back at limited volume or there is no market maker participation to buy back. if market maker buying back, after volume quota of the day filled, you gotta sell the rest to other willing buyers participant.

This kind of situation makes all the participants deploy the strategy- " i'm not greedy, i only want to make 0.5 sen & i'll sell it away" but not only you will think like that. if you can think like that, other traders will think the same.

so from commanding premium of min 3~5%, everyone start to give "discount", thinking "cincai la i wanna make 0.5 sen only, not greedy mah " as long as i profit, there are so many of them, i need to beat them ( estimated around 19 players with minimum holding of 100,000 units each). now everyone don't bother about the premium any longer, as long as can profit, even 0.5 sen, don't bother. so there goes your premium of 3~5%.

yes, i do agree the price of CW is moved by underlying movement. that is not my major concern, my concern is the ability for me to sell away with the price deem fair within limited time with sufficient buy bid of the volume i intend to dispose when underlying move. if underlying move, but CW price don't move accordingly, what is the point? if underlying move, CW price move, other people manage to sell it but I'm still waiting for my queue behind so many waiting list, what is the point?

your example on CW going into discount territory is based on ideal case where underlying keep moving up without time specific time frame.

what market maker do ? yes, sufficient participation mah, why as market market need to take part? with all the bid by so many participant concealing market maker bid volume, they can totally idle around. don't participate also can, let you all fight among yourselves with your 0.5sen bid different at 0% premium.

people like me just won't go in :), unless the underlying is performing extra-ordinary, topping top gainer/losser list for days

I'm not sure how is other trader opinion but this is totally my personal view. :)

Posted by passerby > 2013-05-08 17:24 | Report Abuse

it performed very well after the GE13, really topping the gainer list for days since Monday. congrats to those who have punted

missing the boat with no regret.

if mother share keep surging after this, time to look for higher gearing CW to maximize the leverage effect. Maybank-C1 by Kenanga looks not to bad, just not that familiar with KIBB.

Posted by kcchongnz > 2013-05-08 18:00 | Report Abuse

Told you to buy and you stubborn. Would have double your money. Call warrant price has to rise in tandem with underlying share, whether it is liquid or not, whether issuer does market making or not, or whether in competition with other punters or not. This is because issuer has to settle the price on maturity of the warrants. When call warrant trading at discount, and underlying share with high volatility, there is good chance of making a killing.

Posted by passerby > 2013-05-08 18:11 | Report Abuse

i'm still glad i didn't go in :), lol. not my cup of tea

mother share performing only after GE13, before GE13, the movement is like torturing....lol

Posted by jepun_77 > 2013-05-23 08:49 | Report Abuse

so today market how? next week? becoz today mbb will announce their 1st qtr result...hope more positive news to boost TP..

Posted by BC475654 > 2013-05-26 07:48 | Report Abuse

With the sterling qtr.results,moving towards 0.21 - 0.235 range again next week?Well...let wait and see.

Posted by jepun_77 > 2013-06-04 15:39 | Report Abuse

at least moving right now...fuhhhh...

Posted by jepun_77 > 2013-06-17 16:45 | Report Abuse

really love diz kaunter...always give me a good profit... :)

Posted by kcchongnz > 2013-06-17 17:45 | Report Abuse

Another great opportunity to make low risk profit from Maybank CW?

At the close of Maybank and CW at 10.38 and 24 sen respectively today, CW is trading at a discount of 1.7% with an effective leverage of 8.5 times. This means that if you think Maybank share price has a chance of going up in the next few months before CW expires on 30/9/13, you will make a lot more money buying CW. Each percentage point up for Maybank results in 8.5X increase in price of CW. Even though Maybank share stays the same at the present price at expiry of CW, one would make 15% as it is at a discount of 1.7%. Of course if Maybank share price goes down, then it is a different story. But with this discount and if one buys CW now at 24 sen, you will only start to lose money of Maybank share goes below 10.20, and lose all if below 9.00.

Yes, it is indeed a good opportunity to punt on CW.

Posted by jepun_77 > 2013-06-17 18:07 | Report Abuse

u r absolutely right @kcchongnz....so far maybank is strong...if mother go below 10...so better run..

Posted by heeroo > 2013-06-17 18:45 | Report Abuse

Yes.. up & down.. good for contra player.. B-)

Posted by gordan85 > 2013-06-18 22:09 | Report Abuse

btw, is there charges when cw exercise?

Posted by smartly > 2013-06-18 22:48 | Report Abuse

@gordan85, what exercise r u looking?
cw is only meant for settlement at expiry date.

Posted by KAHFIEHLAI > 2013-06-18 23:49 | Report Abuse

smartly
what do u mean? M cw cannot con. to Mother share mei?
I though every 5 cw con to 1 mother..

Posted by gordan85 > 2013-06-19 00:39 | Report Abuse

yes, i means settlement at expiry date.
Kahfiehlai: this is cash cw

Posted by KAHFIEHLAI > 2013-06-19 06:35 | Report Abuse

Pls elaborate further.tks

Posted by houseofordos > 2013-06-19 16:24 | Report Abuse

Even though Maybank share stays the same at the present price at expiry of CW, one would make 15% as it is at a discount of 1.7%.

KC, I guess you are saying 15% because you are assuming that the warrant price will reflect a 0% premium by expiry ? Is that a sure thing ? Care to elaborate ?

Posted by kcchongnz > 2013-06-19 16:52 | Report Abuse

When Maybank is at 10.38 and CW at 24 sen, CW has the following valus:

Warrant Price Ex-Price Ex-Ratio Expiry date Premium Gearing
CW 0.240 9.000 5.000 30/09/2013 -1.7% 8.7

If you buy CW at 24 sen, your payoff based on the above at various prices of Maybank will be as follows wehn you cash settle your CW at expiry on 30/9/13:

Maybank Price 9.000 10.200 10.380 10.500 10.800 11.000 11.200 11.500 12.000
Gain in Maybank -13.3% -1.7% 0.0% 1.2% 4.0% 6.0% 7.9% 10.8% 15.6%
Gain in CW -100.0% 0.0% 15.0% 25.0% 50.0% 66.7% 83.3% 108.3% 150.0%

So if Maybank stays at 10.38 on 30/9/13, and if you have bought CW at 24 sen, the discount to your original price stays at 1.7%. You will make 15% then. How would I know if it stays at 10.38 in the future? How can it be sure about that? If it drop below 10.20, then you start to lose money. And if it drop below 9.00, CW holders lose everything.

But Maybank share could also go up too, right? If it goes up to 10.80, the average target price of the analysts, then you make 50%. This is all because of the leverage. And in warrant play, the higher the leverage, the more fun is it to punt.

Posted by houseofordos > 2013-06-19 16:58 | Report Abuse

KC, my question is that how sure are you that warrant will reflect a 0% premium by expiry thus 15% gain assuming same mother share price ? warrant price may not always go up when mother goes up... sorry for my ignorance.. new to this warrant thing

Posted by kcchongnz > 2013-06-19 17:41 | Report Abuse

Theoritically warrant price follows underlying share price; when underlying share price goes up, warrant price goes up. Sure CW price doesn't necessarily goes up when Maybank price goes up, because this call warrant is the European style option which you can only settle off with cash at expiry of CW, unlike the American type option when you can settle any time. But theoritically it has to because eventually CW will be settle for cash at expiry.

You can only make 15% gain if the discount to your original purchase price (24 sen) stays the same at this level of 1.7%, ie at expiry, the 5-day volume weight average Maybank share price at 10.38. If Maybank share price is higher than 10.38, your % gain will be higher, and if Maybank share is below 10.38, your gain will be lower, and even a loss if Maybank share price falls below 10.20 at expiry of CW.

Just some mathematics.

Posted by kcchongnz > 2013-06-19 17:45 | Report Abuse

It all boils down to probability. If call warrant is trading when there is no premium when there is substantial time to expiry, the probability of winning in punting in call warrant is high. As CW is even trading at a good discount, the probability of winning is very high.

Posted by gordan85 > 2013-06-19 20:59 | Report Abuse

yea this cw is on dc, if based on current price (RM 10.42 - RM9)/5 =RM 0.284. perhaps ppl dun wan to take risk by higher cos of expiry date soon (30/9/2013)?

Posted by KAHFIEHLAI > 2013-06-19 21:18 | Report Abuse

I wonder if the FI, issuer of the CW will/can manipulate the mother price when approaching the CW expiry date? just for their own benefit?? possible or not...

Posted by kcchongnz > 2013-06-22 13:35 | Report Abuse

For a highly liquid share like Maybank, it is difficult to manipulate, I think. This type of stock because of active participation of local and foreign funds, its share price is generally fairly valued. If investment bank wants to press down its share price to lower the value of call warrant, funds and other investors will buy the mother share if they think they are undervalued. So at the end they may end up a bigger loser.

Posted by tonylim > 2013-06-22 18:48 | Report Abuse

kcchong, any interesting cw in your screens worth a punt for 3 to 6 months holding? Care to share.

Posted by tonylim > 2013-06-22 18:55 | Report Abuse

kcchong, if Bursa is in your screens, care to write some notes here on its cw.

Where is mat cendana

I see some re ratings soon.

Posted by kcchongnz > 2013-06-22 19:00 | Report Abuse

tonylim,
Maybank CW at 23.5 sen when the underlying share at 10.26 now is still trading at a discount of .83%. With a good effective leverage of 8.6 times, it is still a good punt. Something I really can't understand why such a situation exist perpetually, besides the market doesn't agree with the price of the underlying share.

Just came back from a golf outing. will look at other call warrants soon. The thing is this punting of call warrant have to constantly look at the market prices and sentiment. The situation is dynamic and changes every now and then.

Posted by BC475654 > 2013-06-22 19:48 | Report Abuse

Mat Cendana has been missing for weeks.Sincerely wish him well and in good health.

Posted by heeroo > 2013-06-22 20:11 | Report Abuse

Easy to reach @ 0.27 when mother 10.45^^.. Price 0.21-0.23 consider cheaper.. exercise price only RM9.

Posted by kcchongnz > 2013-06-23 18:50 | Report Abuse

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 tonylim > 2013-06-23 21:33 | Report Abuse

Many thanks, kcchong.
Ok lets look at c3

Posted by g888 > 2013-07-30 09:49 | Report Abuse

y this few days keep dropping?

Posted by alibiii > 2013-08-02 11:59 | Report Abuse

"kcchongnz Maybank CW at 23.5 sen when the underlying share at 10.26 now is still trading at a discount of .83%. With a good effective leverage of 8.6 times, it is still a good punt. Something I really can't understand why such a situation exist perpetually, besides the market doesn't agree with the price of the underlying share. "

don't forget maybank may have divedent ex in the month of september just before CW expiry, that's explain why CW trading at discount now

Posted by kcchongnz > 2013-08-02 12:02 | Report Abuse

alibiii, you are absolutely right. But again we won't know when the ex-dividend date is getting nearer, will Maybank share price also will rise as more investors may be attracted to buy to get that dividend, do we?

Posted by houseofordos > 2013-08-02 17:44 | Report Abuse

hey KC, you still invested/punting in Maybank CW ?

Posted by kcchongnz > 2013-08-02 17:53 | Report Abuse

No more. all sold and not looking it right now. Why? anything interesting? Btw, if you see anything interesting, let me know.

Posted by houseofordos > 2013-08-02 17:58 | Report Abuse

haha... nola... me enter and exit a few times already... just wondering what you think about the prospects... still can punt or not...

Posted by kcchongnz > 2013-08-02 18:09 | Report Abuse

Just looked at the prices, Maybank 10.32, CW 0.235. theoritically still 1.4% discount. But watch out what alibiii said above. There is a dividend which will be ex-dated just before expiry of CW at end of September. So if Maybank share price stays at it is, and the share price adjusted to the dividend of 32 sen (assume same as last year), to 10.00, you will lose money, 15% to be exact.

So the risk-reward is not good. Further you really have to watch the prices all the time. Remember how Maybank share dropped by a lot two days ago?

Posted by tonylim > 2013-08-02 20:09 | Report Abuse

g888 did u mean bursa cw?
I have taken profit last week.

Posted by jkngo2003 > 2013-09-06 16:41 | Report Abuse

may i know why this share price still so high?

Posted by tanyuethan > 2014-04-08 15:17 | Report Abuse

i dun understand CW

Posted by yingzhe17 > 2020-07-22 21:04 | Report Abuse

Just sold all. Tq suckers. Come sept buy again because your provision just up 50%