As for me i love high risk, so i tried to bull the Warrant - Gamuda CI on the opening 4 Jan and gain about 30% when it close at 7 Jan 2011
Saturday, January 8, 2011
GAMUDA
GAMUDA start to goes up on 4R1G starting 3 Jan 2011 and gain about 11% when it close at 7 Jan 2011. Next resistance at RM 4.45 and still have more space to go up before profit taking
As for me i love high risk, so i tried to bull the Warrant - Gamuda CI on the opening 4 Jan and gain about 30% when it close at 7 Jan 2011
As for me i love high risk, so i tried to bull the Warrant - Gamuda CI on the opening 4 Jan and gain about 30% when it close at 7 Jan 2011
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Hi Edwin, new to ur blog but old in investlah..:D
ReplyDeleteDun u worried about the maturity days left for G-CI? What will happen if until the day it expires, it has negative premium?
Thanks for the good blog! :D
Hi kaikiattan and welcome to my blog.
ReplyDeleteFor G-CI the, the expiry of this stock will be 2 Feb but take in consideration on the T+4 days which the stock will stop trading by 27 January.
Currently the value of
G-CI = 0.25 and i bought at 0.19
Maturity Price at 3.12 and mother share is about 4.25 and conversion at 4 to 1
so basically warrant price = (4.25-3.12)/4 = 0.2825 which give about -2% premium.
Let say you buy this G-CI at 0.25 and it expires today. The investment bank will refund you bank the price you buy with addition of the 2% premium too.
But if suddenly the mother price goes down and the premium start to goes up to positive region and when your warrant expires, all your capital will be loses without any refund. So basically it will be advisable to sell your warrant before the maturity.
This is an example on how people lose all their money in warrant.
Example on IJMLAND-CA
Expiry Date 3 Jan 2011 but normally it will traded at T+4 which will normally stop trading 4 days before which is on 29 December
Exercise Price= RM2.2
Conversion = 3
Let say you bought this ijmland-ca at 0.26, Your mother stock value supposed to be
Price for IJMLAND on 29 Dec = RM3.24
Conversion Price for Warrant = (RM3.24 - RM2.2)/3 = RM0.34
In conclusion all CA investor we happy that if IJMLAND continues to maintain this price they will get refund of RM0.34-RM0.26 = RM0.08 (30% profit)
But this is Boleh Land whereby stock are easily manipulated by investment bank. They will try to push the mother share toward the below price so that the CA investor will get burned of their capital without any refund ( This is how investment bank earn money)
1) The Investment bank work will Media and IJMLAND/MRCB to delay the news of merger MOU announcement to 29 Dec 2010
2) Once the Merger news is out on 30 Dec 2010, the investment bank tries to short the IJMLAND until RM 2.86
Conclusion on the Exercise Date on 3 January 2011
Mother Price = 2.86
Exercise Price = 2.2
Conversion =3
So now actual IJMLAND-CA price is = (2.86-2.2)/3 = RM 0.22
If your CA value you bought is above RM 0.22 you get nothing meaning all your capital will be burned
If your CA value you bought is below RM 0.22 then the investment bank will repay back you at RM0.22 per share
This is what Cash Warrant is about :) Scary right?
Actually i will be taking profit for my G-CI and will wait for this GAMUDA to retrace back to RM4 and try to accumulate GAMUDA-CM ( longer expiry date)
ReplyDeletewow....u replied a lot!!! and i am really really very appreciate of that hard work of urs!! THANKS~
ReplyDeleteoo...now i just understand y ppl always say warrant is dangerous..haha~
The ex-date for Gamuda's dividend is on 13th Jan. Which means ppl will buy in and the price shud be upward until 12th of Jan to get the dividen right?
BTW, just got a copy of the reference book u recommend. Will look at it later...thanks, u r relaly a great help~ :D
Yes, but for dividend play normally people will start goreng the counter it
ReplyDeleteAs for the book, it always use this book for reference because it has many detail explanation on all the important Technical indicator