Tuesday, October 21, 2014

Put Warrants of KLCI


Recently ... as KLCI diving down, many ''promoters'' taking the opportunity to talk about the put-warrants. This is an un-known instrument to most retailers. Heck ... it is a gambling instrument for us to buy into it.

Many may have heard of call-warrants(and get burnt in it too ... and lost ALL when it expired with premium .. don't worry, it is rarely that a call-warrants will expire at a discount(in-money)) ... and it you don't know that these are NOT companies' warrants, then you should NOT touch them at all. It is issued by local broker houses, to earn money. Yes, when we trade ... win or lose, the IBs earning money. They are the one laughing ... as we all trade. Sigh ... I might as well be remisier or dealer myself, or own the bank rather than trade. Sure win biz ... haha.

Ok .... here I m going to show some of the hot put-warrants of KLCI. It is tracking KLCI and if you think KLCI will go lower, you will BET on these put-warrants.


KLCI-hb : Issued by CIMB in July ... with 1 year tenure ... so, expiring next July. Issued at 15cents(standard for structured warrants). Low at 8cents (when market bullish) and high at 19 cents(last thu when KLCI dived).

IF KLCI successfully rebound, this put-warrants will be dive.

So, could we use it to hedge? Probably ... but, I do not understand the mechanism. So, I will avoid.

If we need to hedge or trade the index, one could consider FKLI too. Yes, we may long or short the index. I am still learning more about it ... but, it is definitely not for majority retailers. We need to be strong technically and able to make decision rationally, which most of us retailers fail badly. It is a big-boys game ... when index being pressed down ... and pulling them up!!

 Anyway ... just avoid the ha, hb, hc and so on ... those are put-warrants.

Time for lunch ... and more classes.

TEH

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