For CALL : [ (exercise ratio x current price ) + current index = breakeven index For PUT : [ (exercise ratio x current price ) - current index = breakeven index
It's merely opposite. The bank does not have obligation but the bank set's the mathematics on the product. Yes I know the product get's endorsed by Bursa, etc, but based on experience, there is never been an easy way to get out once you enter warrants. Reason is, the mathematics are set to trap you and chance to go out only determined by volume, volatility and heartbeat.
Which is exactly the reason why there is such high risk involved. The market always has other plans. But if I were the bank I will take advantage of demand. Its not possible for us retailers to fight a financial institution with unlimited supply of bullets.
I suggest for future, try asking yourself what YOU THINK the index will be at MATURITY date. Then judge for yourself if the current price is too high/low.
Structured warrants are ALWAYS a gamble. you're essentially betting on a higher or lower index/stock price. You stand a 50/50 chance. If you're bullish get the CALLs.If youre bearish, get the PUTs.
Another tip, the higher the conversion ratio, the more volatile the price movement. One day you're up 20%, next day you're down 50%. I try to avoid high conversion ratio stuff.
Westgun, it is not easy to price in an event which cannot be forecasted due to its poor likelihood. No one predicted the hydrogen bomb test by North Korea, and no one could ever predict when a real war would happen. When it happens, then market will react on the news. At the moment, people are trying to speculate to drive the market the way they want. Until Obama announces the war, it's still a speculation.
Shellhouse, yes indeed, but the market has its own pencil to chart these warrants. H25 was a good example where you could make almost 150% profit even with high ratio if the time is right. We are not fortune tellers but trading at these "con style" gestures, one could make money, or vice versa.
must try to buy and sell fast~ otherwise will get trap...
HSI or China50 warrant which issue by Macquarie move even faster than those CIMB warrants of FBMKLCI... what I can say FBMKLCI structured warrant is suck~ not only CIMB, some of Macquarie also the same shit~
Its profit taking week, market will stabilize regardless because there is no strong catalyst to downtrend, even after Q4 report, surprisingly stocks stay floating.
H43 appears a good buy too. I will probe both options, market too volatile, KLCI seems a little bullish, I am expecting some correction based on 1 day chart.
H5 on the contrary had much lower exercise price, hence the risk of downside with the given time. H27 will expire end of May, and with exercise price of 1550, its still worth considering because KLCI trend sometimes can be shocking with sharp downward candles.
Bilis Bilis Mar 31, 2016 04:43 PM | Report Abuse I am seeing KLCI going into minor run up next 4 days from 1713 today, 1720, 1720-22, 1725-30, 1731-1744.....
-------------------------------------- The above reading is correct except for today's target 1722 being overpaced by the near closing 1725 (running into tomorrow's portion...maybe making up for last friday's loss time.)
So any morning pullback into 1720-22 (or even 1719-8) is natural and to be expected,,,, and shud be reversed to the higher 1724-1726 ...
Expect pace to be bigger from now (>10 points moves) next 2-3 days into the 1730-1732, 1733-1744....
I was so bored i went C4,C22,C24...i dont expect CIMB to be as aggressive as Makuali in running their Cs , perhaps 50% daily ...
I dont expect Hs to work until the above targets is reached...
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Posted by Shellhouse > 2016-01-29 12:19 | Report Abuse
For CALL : [ (exercise ratio x current price ) + current index = breakeven index
For PUT : [ (exercise ratio x current price ) - current index = breakeven index
Simple maths