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Are Structured warrants worth playing?
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teeth53
Supreme |
30-Mar-2012 22:06
Yells: "don't learn through life, learn to grow with life " |
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Again I would like to highlight from.....How warrant shr is played. Real sample. http://www.sharejunction.com/sharejunction/listMessage.htm?topicId=10211
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teeth53
Supreme |
30-Mar-2012 22:00
Yells: "don't learn through life, learn to grow with life " |
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Hope it help further explain how warrant shr is played... |
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teeth53
Supreme |
27-Mar-2012 17:13
Yells: "don't learn through life, learn to grow with life " |
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Thk even more for ur hardwork. This will be enuff to tell would be new players on playing with warrants..
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settowin
Veteran |
27-Mar-2012 14:08
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Actually my intention is for those learning to play the stock market and just warning them of the hidden dangers unknown to new investors thinking that the game is 100 per cent investment which is not. Take for example STI2950CW120430 price 0.044 per warrant X100,000 = $4400 for the transaction. (I used 100 lots because you cant play one lot or 10 lots as the brokerage fee already how much?) Market price (STI INdex): 3005 In the money. Assuming that if warrant expires today, the issue give you back $2,200 for the 100 lots of warrant, you lost $2200. If out of money, index goes to 2950, assuming the expiry today, you would lose $4,400 for the transaction. Now the expiry date is only 24 trading days to go, with decaying money of about $100 daily until expiration date. It is not worth the while, yet you can see people are chasing and buying these structured warrants?. Newbies should not that this is 100 per cent gambling since there is no exchange of stocks on expiry. Your gain is only to sell it above 0.044 cents, etc.. Good luck.
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settowin
Veteran |
27-Mar-2012 13:10
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Another area of concern is that Structured warrants issuers might be bankrupted should the market gets manipulated when an issue with an underlying instrument is " cornered" by large moves. Of course such a situation is always under control by SGX, so not much of a problem, yet the issuers could face big losses when the expiration of the Warrants is due with the underlying shares sky rocketing until they could not pay. | ||||
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settowin
Veteran |
27-Mar-2012 13:03
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If we do not ban the issue and " trading" of Structured Warrants, then the issuers must pay gambling licensing fees. My thoughts only. | ||||
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settowin
Veteran |
27-Mar-2012 12:57
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Since Structured warrants are purely 100 percent gambling, the gaming authorities should ban them. In fact this sort of things is siphoning too much money from the market and pose a challenge to casino operators and the well being of the stock market. We should replace these structured warrants with options instead. My thoughts only. |
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settowin
Veteran |
27-Mar-2012 12:49
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Comapny warrants are best when the strike (exercise) price is very low while its mother share is making good profits giving dividends. MDR warrants surely a terribly good buy to keep. Beware of Structured warrants, you normally get nothing in return and if you get, it is usually not enough to pay for the amount of money you spent on the purchases resulting in real capital losses.
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teeth53
Supreme |
27-Mar-2012 11:56
Yells: "don't learn through life, learn to grow with life " |
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MDR W140925 - companies warrant and is covertible anytime, end date Sept 2014. | ||||
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teeth53
Supreme |
27-Mar-2012 11:48
Yells: "don't learn through life, learn to grow with life " |
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Thk for all the hardwork..:) | ||||
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settowin
Veteran |
27-Mar-2012 11:22
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Hello, good morning, everyone huat arh! Since the market is so quiet in Singapore, despite the bullishness, I want to share with those who are anxious about entering the warrant market. Lets briefly differentiate between company warrants and structured warrants. Every1 knows what is co warr, but many still wonder what are structured warrants. So lets first describe them in simple terms. 1. Company warrants: These are given and issued by the companies themselves and are mostly free of charge. FREE, yes, for they normally come with some form of offers such as rights issues with warrants, or bonus issues with warrants. You get them absolutely free. After getting them you can trade it when they are listed, or you can subscribe for the share at some point of time before expiration dates. Once the date of expiration lapses, they are useless and you can only adorn them in your bedroom, that's all. So if you get a company warrants, you are lucky to get free things, and if the mother shares spike, you will make money by selling off the warrants or exercise the warrants at the STRIKE PRICE stated when the warrants were issued. For those who bought warrants, in the hope of the mother share spiking, they stand to leverage from the CHEAP price of the warrants, but their risk of losing is if there are no market play and the strike price is higher than the mother share's traded price. This situation also will send your warrant papers to the bedroom walls. 2. Structured Warrants: These are created by some institutions approved by the " authority" to issue structured warrants (virtual warrants). They could be warrants of Hang Seng Index, Straits Times Index and some listed company names (The company has nothing to do with the warrants even though the warrants may carry the first name of the company, eg. Structured Biosensor Warrs, Kepple Warrs, etc. These structured warrants will also have an expiry date and an Strike price. These str warrs are not issued to you for free. If you want to trade them, you will have to buy from the market. Structured warrants come with Puts and Calls. A put warrant is the opposite of the call warrant. A structured call warrant is a positive (yang) to the up direction of the market, while the structured put warrants is the negative (ying) down direction of the market bet. Structured warrant pricing: Normally, the warrant prices are not the straight forward price you are paying. The institutions always place a ratio of exchange which an investor off-hand would not know unless he searched around. The ratio is the amount of warrants you buy divided by the ratio. For example if the ratio is 3 to 1 share (Share means the instrument, eg one share of Biosensors), then your warrants is worth one-third of a share of the instrument. The ratio is a covert thing which is very crude way of doing things. It is a dark side to me. Say if you pay 10 cents per warrant on 12 lots (12,000 warrants), you are actually paying to get 4 lots of the virtual (not physical) instrument (12/3),. Some ratios are higher than 3:1, especially in big tickets, they are higher. STI Warr are 2500 warr to 1 share, and HSI 1000 warr to 1 share. With Structured warrants, you don't get to exercise to get the stocks or instrument. It is actually pure gambling. On expiry date, if the call warrant's strike price is higer than the market price of the underlying instrument, you get washed out. If it is lower than the market price, the institution will pay you based on the calculation and ratio of exchange. For structured put warrants, it works the opposite way. If the market price is lower than the strike price, the institution will pay you according to the ratio stated, and if the market price is higher than you get washed out. After doing some calculations, I found that Structured warrants are overly too costly since the issue build a base price to profit in any market conditions. Do some mathematics and you should know what I mean. But structured warrants for gambling is very fast, since the market makers just like to push up to get more money from the players. The institutions mostly issue 80 million warrants per issue. I guess they make per issue no matter what market conditions, more than 20 million bucks if my maths is correct. So before you buy warrants, know what warrants you are into. Cheers. |
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