KLCI going to hit 1700 points this year and continue to down next year. GST will impact the market next year, US fed will make decision on middle of next year & Europe and China economy is flattering. If market rebounce, those trapped investors will sell to u, fyh30. I hold FBMKLCI since 8 cents, I short the market.
I also short the market...but my entry price is higher. with the recent drop...almost all the share back to Mar and April 2014 level. The worst is oil and gas counter, drop back to july and august 2013 level
Tomorrow Friday, u think stocks will rebounce on weekends meh? Next week Deepavali, sell all the stocks u hold in ur hand lah. Dun crash together with the market, dun rush to enter the market~
others raw material price all drop..even aluminium price also drop oil and gas also drop palm oil also drop now Inari..that related with iphone business also drop.... this scary me.. don't hold too much share on hand at this
Don't buy if u dun understand. Temporary stay away from stock market. Go put bank fix deposit, dun lose money during bear market, earn money when bull market come. U will thanks me on that.
just a kind reminder for those who is not aware that this is a warrant and expiring next year Jul 31. If bear market persistent then you may earn big money but bull run takes over any time now as year end is approaching. Then... you might stuck there.
beware of the time lag that the warrant carries.... sometimes there may be a sudden increase in KLCI, but the wa will not move much and then next day ....drops
Another way is to calculate the BE (breakeven) point rather than the discount/premium as one will not realise the magnitude of the discount/premium.... going back to myoswee's case (good job :-) the breakeven is
= Exercise Price - (Purchase Price x Exercise Ratio) = 1880 - (0.155 x 667) = 1,777; which means if u buy the put warrant at $0.155 your breakeven point is KLCI at 1,777 (any value below this level - at maturity - you are positive).
This is european style, so only settled at expiry and not earlier... so tough. Few days back the wa was trading at 8.5c, it had a breakeven of 1,823.
look very much like gambling in Genting buy big vs small, odds vs even..depending very much also on the worldwide economy outlook like QE extension/renewal etc....
Posted by myoswee > Oct 25, 2014 10:28 AM | Report Abuse
Guess what , The premium just got wider. Good luck to those still holding
If follow today closing of FBMKLCI 1818
This warrant = 1880 - 1818 / 667 = 0.09
Now trading at 0.16, premium of 7cent ( 77%).
are you sure the simple calculation that you done is the correct version?
is it possible the 667 put warrant is equivalent to 1 contract of future with a strike level of 1880. if that is the case, this call warrant may not be at 77% premium as you had calculated. if that is the case, the contract is still having 62pts profit equivalent to rm3,100. therefore the intrinsic value for the put warrant now is 4.6c, the extra 11.4c the market is pricing in the 9 month duration of the Put. plus the recent volatilities. if so, it is trading at 247% premium to its intrinsic value.
at 1880 index, this put warrant is using 667 lot to gearing of 1 contract fkli worth 94,000 at the cost of 10,600. the time value of the put warrant need to be considered, it still has 9 months life.
if my method of calc is correct. if ci drop to 1500 during the period. the put is worth 19,000 thus the fv of the put would be 28.5c
if ci drop to 1200 during the period, the put warrant is worth 51c.
if ci drop to 1000, the put warrant is worth 66c.
any break out of ci above 1880 would destroy any intrinsic value, leaving on time value worth.
i have not seen the put warrant contract details. its just my uncommon sense. i may be wrong.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
hooi
1,773 posts
Posted by hooi > 2014-08-05 16:23 | Report Abuse
Bought FBMKLCI-HB at 0.085(Trading buy)