Posted by calvinteo > 2017-04-16 00:30 | Report Abuse

BULL MARKET- NON-AWARENESS OF STRUCTURE CALL WARRANT: KERJAYA -CA
Stock: KERJAYA-CA
Code: 7161-CA
Style: European-style cash settled
Issue Size: Up to 35M SW
Exercise Ratio: 2.5 SW 1 shall be entitled to 1 Kerjaya [KP] Share
Listing Date: 14th March 2017
Exercise Price: RM 2.60
Expire Date: 29th September 2017
Issue Price: RM 0.15, being (i) 15.12% of the Reference Price divided by (ii) the Exercise Ratio, rounded up to the nearest half sen.
Settlement Method: Cash Settlement
Exercise Date: On the Expire Date i.e. 29/09/2017
Exercise Expenses = [Settlement Price - Exercise Price] / Exercise Ratio x 0.30%

Intrinsic Value [IV] Calculation = [Settlement Price – Exercise Price] / Exercise ratio
Market Trading Price = Intrinsic Value [IV] + Volatile Value [VV]

Note: Volatile Value is depending some of the following factors:
* (i) Bull perceptions
* (ii) Foreseeable of Kerjaya’s prospectus and substantial growth
* (iii) Time Value Factor
* (iv) Bonus issue of KP, if any etc.

Illustration: Based on Closing Date on 11/04/2017

(1) Kerjaya Share Price (as of 11 April 2017) RM 2.91
Kerjaya-CA Price (as of 11th April 2017): RM 0.205

Intrinsic Value of Kerjaya-CA = (RM 2.91-RM 2.60) / 2.5
IV = 0.31/ 2.5 = 12.4 sen.

Premium [Violatile Value/ Time Value] = 20.5 sen – 12.4 = 8.1 sen.
Gearing = Price of Mother Share / (Exercise Ratio x Price of Call Warrant) = RM 2.91 / (2.5 x RM 0.205) = 5.68 x I

The gearing 5.68 x I means that instead of buying one mother share at current price, you are able to use the same capital to buy its CA in which represent 2.68 units of the Mother Share.

llustration Scenario
(2) IF Kerjaya share is RM 3.50.
IV = [ RM 3.50 – RM 2.60 ] / 2.5 = RM 0.36

Market value for Kerjaya-CA = RM 0.36 + RM 0.09 = RM 0.45

Note: Based on same VV at RM 0.09 sen.

(3) IF Kerjaya share is RM 4.00.
IV = [RM 4.00 – RM 2.60] / 2.5 = RM 0.56

Market value for Kerjaya CA = RM 0.56 + RM 0.09 = RM 0.65

Note: Based on the same assumption that VV is at RM 0.09 Sen.

I hope my demonstration and research above may be useful and can help you understand better the mechanism of Structure Call Warrants. Please refer to Kerjaya-CA time sheet, listing information and profile from Bursa Malaysia website.
I believe this may be a simple illustration to attract investor or newbie to learn, understand and enhance awareness of the Structure Call Warrant.

Reference: Please refer to Master Sifu Icon888’s his recent article which was posted on 1st April 2017 – “Add Sprinkles of Call Warrants to Spice Up Your Portfolio“.
His remarkable quote "The strategy is interesting not only it makes your portfolio sxxier. It also opens up a new universe for retails investor like us in terms of exposure to blue chips”

NOTE: TRADE AND OR INVEST AT YOUR OWN RISK

Posted by jt1999 > 2017-04-16 13:22 | Report Abuse

Thanks for sharing this information with us. I believe the price will shoot up soon (小刀据大树) will buy & accumulate in my portfolio. Thanks again for good write up & sharing.

Posted by goldenluck16 > 2017-04-23 13:56 | Report Abuse

Buy and keep for bigger gains in the coming months

Posted by TannCK > 2017-05-23 10:26 | Report Abuse

Wahhhh..... go go go

Posted by goldenluck16 > 2017-09-12 20:50 | Report Abuse

New closing high today...