Basically the valuation for this warrant is a bit messed up previously. Went up too high, now fluctuations very significant. Think will stabilise next week
From the chart, normally when mother share up the warrant price will all follow up. When down all follow down. But today others follow mother, only this keep down when mother up. Any sifu can explain?
@bkokyew Exercise price is the price you can convert to mother share. Exercise ratio is how many warrants you need to convert to 1 mother share. c88 price now is RM1.99, exercise price now is 2.65, mother price is 7.7, exercise ratio is 4.2:1. Means you can pay RM2.65 + 4 warrants (4.2x1.99) = RM11.01 to convert to 1 Supermax by 26 Jan 2021.
Now if Supermax didnt reach RM11.01 by the expiry date, the warrant is basically worthless because it doesn't make sense to convert since you can buy Supermax at a lower price.
Taking yesterday closing price at RM2.48, RM2.65 + (4.2x2.48) = RM13.06 do you think Supermax can go to RM13 by Jan 2021?
If you buy lower than RM1, you already more than 100%. Don't be greedy. Profit is profit. Hope this helps.
Hmm. But based on this does it means the higher the warrant price. When it comes to expiry date for conversion will have more loss? Lower warrant price means better?
Supermx C88 is NON -COLLATERALISED EUROPEAN -STYLE CASH SETTLED CALL WARRANTS. We don’t get to buy underlying shares everything is settled by cash. They settled the warrant upon expiry by taking mother price minus the exercise price divide conversion ratio then multiply your units will give you your settlement price in cash. We don’t get to buy any shares period.
My 2cts opinion what happens to the price on 29-5-20. Usually the warrant price move in tandem with mother share. When the warrant was at 2.48 theoretically the mother should move to RM13 already but the market overshot so much when it should be around 1..20 and usually market will pay extra premium around 4-5 cts extra only. So in this case the market overshoot by over RM1.30. There is very good premium. Question is Whether market will continue to pay this premium when other warrants are not? It could be anybody guess. Eventually the risk is when towards expiry in Jan 2021 and the mother share is at RM13 and if you didn’t sell in the market before that then the issuing bank upon expiry will settle you max is RM2.48. If the market price for warrant is RM3 then you loose RM0.52. Don’t know correct or not. So possible more correction coming.
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....
DKinvest727
170 posts
Posted by DKinvest727 > 2020-05-27 16:20 | Report Abuse
Good.