Friday, June 29, 2012

GasM's call-warrants : cd vs ch

Comment by Warrant Warrior

Why on earth would you invest in GASMSIA-CD?

It has an exercise price of RM3.15 and is currently trading at Rm0.105 at noon. To break-even, you will need Gas Malaysia to hit RM3.47 by maturity to even make money. Currently, Gas Malaysia is at RM2.56. Quite a long target to aim for isnt it?

if you calculate the premium correctly, GASMSIA-CD has a premium of close to 40%!!!!

I went into GASMSIA-CH myself, with a modest exercise price of RM2.20. Meaning to break-even, i would need Gas Msia to hit RM2.74. Just yesterday Gas Malaysia hit a high of RM2.61.

Yesterday, GasMsia-CH hit a high of RM0.20! :)

Reply by TEH

Thanks for a comment. Yes, I thought of finding some time to write about my works done on GasM-CW. Then, I thought it would not be advisable as I might attract many punters!!

Now, the word INVEST was being used when I attended a call-warrant talk weeks ago by a person(from OCBC, organised by RHB). I wanted to correct the word INVEST. As for my INVEST is of longer term(above 3 years) with good fundamentals, recession-resilient and good dividends(above inflation rate).

So, when we buy something like BIMB or even Genting now, it is TRADE. While we want to 'time' the low, sell high ... it is not possible. We could only check the higher possibilities or putting out our trading plan with some indicators.

How about CWs? It is PUNT ... or in lay-man word, gamble. Placing a bet. That is my word for playing with the fire .... call-warrants.

Time frame : In my trading systems, time frame come first. If I am going to take a punt in CWs, I need to be FREE for 3 days. I do mean, not working ... running around and such. Because, I will sell the moment it shoot up(or down). I do not care about indicators, I dont bother much about many things ... it is a PUNT. Such as ... German vs Italy, if you give me half-ball, I will be on Italy. If you said level-level, of coz I will go for German. It is a GAMBLE ... but time frame is short. To me, 3 weeks holding is very long for CW. I wont. Same as football ... just 90 minutes, or extra-time 30minutes. Done with it. Win or lose, it is a gamble, anyway.

Volume : This is another very important to me ... i need to SELL, and if the volumes decreases, time to move out. But the huge surge of volumes, many punters ... getting greedier are moving in. Volumes created by syndicates, the sharks ... to lure many punters. So, I chose cd as the volumes is higher.

Price : For a 10cent-CW ... it is easier to PUSH(to trap) up ... rather than 0.17cents-CW. So, Checking that I will go one or two days punt on her, I chosen cd. In fact, I went 'live' with some in my group!!

Premium : Yes, normally I do check premiums (and gearing too) for so-called safer trades. I will not HOLD till expire ... that is for sure. So, I do agree that ch is 'better' than cd.

Indicators : No indicators being used. I do not use indicators to punt CWs. I will laugh and wondered how some could use those RSI/ADX or MACD to trade CWs? Serious? Candle-sticks and volumes reading are very important(sort of VSA concepts). Knowledge and experiences are essential elements for trading CW, in order not to get badly burnt.

Now, I bought at 0.10 first ... queued 0.095 and 0.09 too ... done. I do not expect 0.09 to be done, honestly. My 0.085 is my last queue. Why 0.085? Based on the lowest price!! When I bought cd, ch WAS moving first ... it was early in the morning. GasM was breaking 2.47 with momentum seen. So, I posted in my stock watch for those NOT risk taker to buy at 2.47 levels. But, I did mention I grabbed cd at 0.10. Many queued 0.095/0.09. All done. Talking about punting, there are MANY more taking cd rather than mommy. Only 3(of I knew of) taken 2.46-2.47 on mommy.

So, good question .... why cd? Of all other CWs, no volumes/trades registered then ... ch was active, cd was lagging, I saw it went from 0.09 to 0.095 .. then 0.10. So, I placed 10k for 0.10. That is only RM1k done. Yup, you could guess now how I came out with 100k units basing on 0.10, right? Yes, I did my plan ... in my head. It was fast ... could not explain about position sizing in my group. Could not have time to explain premium and such. You know what I mean?

so, 10k units at 0.10, 20k units at 0.095, 30k units at 0.090 and last(not done) 40k units at 0.085.

So, in hands ... I have 60k units as I have written earlier(I told my tratles 'live' la). But I did not tell them details, DO NOT want to encourage punting or these gambling habit is NOT good.

The high was at 0.11 ... so, the next day, I posted to all that I am selling at 0.11 ... many queued at 0.11, some was late but 0.11 done all anyway. Now, the risk was VERY high for others to follow ... it is NEAR impossible to me. I was reminded that a person lost punting into UOA-cb with me when I cut-loss but weeks later, he ask me what to do with UOA-cb ... downed by 30-40%? Ouch ... he left my stock-watch after that!! See? Many do not understand risk-management. They always think of quick profits! That is RISK.

Where am I? Yes ... why cd? cd could give me better percentage gain, right?

So, I told them(my group) I sold half(30k units) at 0.11 and keeping 30k units at 0.115. When I posted my GasM ... cd was at 0.11 with huge selling queue at 0.11. My 0.115 done after lunch!! If not done, I will SELL before market closing, anyway!!

What if ... it shoot up to 0.12 or higher? Just say "thanks" for the profit and 'bye bye'.

Let us discuss about premium : One of our senior "KPH" tratle was questioning the logic. With ratio of 3, from 0.09 to 0.11, that is 2 cents, right? HOw much mommy needs to move up for that 2cents of cd? Premium was at 40+%, I do know that.

Yes, 0.09 to 0.11 is a 22% profits in one day!! Some done that ... some grabbed at 0.095 and sold 0.11, some sold 0.105 ... i dont control their trades. My stock-watch is meant to write what I am trading, buy-sell .... holding, averaging down ... why I like certain stock. I do add 'educational' pointers for those interested to learn!! Worth your RM30 per month, right? (pstt ... promoting .... last call? haha ...THINK risk, not profit!!)

GasM-ch : High at 0.20, when I check on her, it was at 0.170. Assuming that I managed to sell at peak 0.20.

10.35 am : GasM lowering to 2.55 now, cd at 0.10 and ch at 0.18. Which one will be a better bet for next punt? I wont move in next week if I could not be free. I will not be free next week(JULY) onwards with so many things starting ... cd or ch low volumes ... many bought at 0.11 and 0.115, when it was a sell to me. GasM-cd went to became the most actively traded counter in KLSE. Today ... slowly those late comers, contra players will have to sell, profit or loss.

Thanks again for the comment. I could write in greater details but I do not want to encourage many to punt into call-warrants. Please DO NOT trade CWs if you do not wish to lose money.

Note : Seriously, it is not just few clicks of the mouse. I told my group that there will be 9 CWs attached to it, and was doing homework before they were listed. Also, I never know if I will trade any of them, if they are tradble etc etc .... we do work first, see IF we would be rewarded. If not, it is OK ... we do the next homework, for learning purposes. I am always in learning ...please share and I will be open to listen.



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