Becoming A Full Time Trader ?

1. Some interesting question and answer here for someone would like to consider as full time trader. :)

Thomas SM // March 31, 2011 4:44:00 PM GMT+08:00

Hi Hng,

I am very impressed with your performance. If you don't mind, I would like to seek for your advice that if anyone were to be a full time trader, with estimated earning of RM2k -3.5k per month, how much capital do I need?

Any other advices that you can share in order to be a full time trader?

Thank you very much!

hng // March 31, 2011 6:09:00 PM GMT+08:00

Thomas SM

Lets take 3.5k pmth as example, you need to have initial 50k as initial capital and open an margin account which give you additional margin line of 75k. Your target return pmth is 3% at least or average of 10% quarterly. You also have to 10k emergency capital to standby as fund to support your 3 mth living expense.

In short, you need 50k + margin line 75k + 10k standby living expense to start.

2. Scalp trades today :-

AMFIRST - sold RM1.16 - RM1.17

STAREIT - sold RM0.875 - RM0.88

3. Dav C, you bought in Sapcres-CB ? As i mentioned earlier look at mother share movement, when mother start to move you monitor the CW, if the conversion ratio for CW still low compare to mother share movement, say mother up 7sen and conversion ratio for CB is 3, then 7/3 = 2.3sen, if CB flat or up like between 0.5sen to 1sen then is safe to buy in. Look at today trade CB up 3sen, thus 3 * 3 = 9sen, up more than mother, not worth anymore unless mother open 3sen gap up tomorrow. If CW is liquid then even better, easy to trade. Everyone, has different style of playing CWs, i hardly stare at screen all time, so i prefer to earn half sen each time i trade, fast game and safe as well. For people more adventurous, they go along with mother, mother up hold and mother down sell. BUT it is easy say than done. I am risk cautious type, so prefer to close trade with half a sen with huge volume. :) Good luck.

4. Recently post a lot of CWs trading but don't mistaken me that i am a CWs trader. In fact, my preferred way is still intact and focus. I am a dividend player, have been staying on course for many years and the yielding through dividend is definitely good compare to ordinary FD.

ASM 2011 ANNOUNCED INCOME DISTRIBUTION OF 6.38 SEN PER UNIT

1. Kuala Lumpur :- Amanah Saham Nasional Berhad (ASNB) has announced an income distribution of 6.38 sen per unit for Amanah Saham Malaysia (ASM) for the financial year ended 31 March, 2011.

PNB Chairman, Tun Ahmad Sarji bin Abdul Hamid said, the income distribution involves a total payout of RM757 million, an increase of 16 percent from RM652 million paid last year.

Up until 15 March, 2011, ASM has recorded a gross income of RM909 million. Profit from the sale of shares contributed RM407 million, or 45 percent of the gross income.

Dividend income contributed RM361 million or 40 percent and the remaining income of RM141 million or 15 percent is derived from investments in short term instruments.

The calculation of the income distribution is based on the average monthly minimum balance held throughout the financial year of ASM. The income distribution will be reinvested in additional units of ASM to be automatically credited into the unit holders' account on 1 April, 2011.

ASM transactions at all branches and agents nationwide will be suspended beginning 22 March to 31 March, 2011 to facilitate the calculation of income distribution. Unit holders can update their ASM investment book beginning 1 April, 2011.

The income distribution statement and annual report will be sent to unit holders beginning middle of May, 2011.

ASM is a fixed priced 'Equity-Income Fund' aimed at providing unit holders with a long-term investment opportunity that generates regular and competitive returns through a diversified portfolio of investments.

2. 6.38sen, 0.08sen higher than last year of 2010. :( Nevertheless, still very much higher then FD. :)

3. Scalp trades today :-

AMFIRST - sold at 1.15 & 1.16

Scalp Trades Dated 29/3/2011

1. Scalp trades today :-

SUNREIT - sold at RM1.04, bought in RM1.03 the other day.

2. Just received my cash settlement on Tenaga-CP. :) Unable to get Maxis-CD at 0.065sen yesterday, those bought in at 0.07sen, the profit likely to be around 2% to 3.5%, nothing fantastic, so no regret.

3. To answer Davors, the reason market maker issue CWs is to earn money from the premium, of course when high premium they will start to dispose, i think it apply to all Bankers. Not necessary OSK only. I would suggest not to touch on high premium CWs, in fact during my initial sharing i already stress not to buy high premium CWs, because you are buying higher than market value and the only thing you gain is longer period of expiry but overtime the time decay factor come in, that is enough to eat into the premium away, then you left with ineffective CWs with mother shares price movement. Generally CWs become sensitive to mother's share price only when it has negetive or small premium, that is the time we should study the movement of mother share. Naturally people will tend to buy CWs when mother share price surge, because it reflect the actual value of CWs. Exercising the CWs with negetive premium has a high chance of making money as well. I for one will prefer to go for such trades on expired CWs as its winning is almost 80% to 90% rather than trading the CWs where it is a double edge sword that can go either way.

Nevertheless, i appreciate Davors' comments as this imply that he do observe the movement of CWs in relation to mother share price. This is the right way to do while trading with CWs.

4. Congratulation to my comrade hng... :) he is just like a daily money making machine. :)

Scalp Trades Dated 28/3/2011

1. Scalp trades today :-

AMFIRST - 1st sold at RM1.15, bought back RM1.14 for intraday. :)

2. Queue Maxis-CD at 0.065sen, unfortunately get nothing. :( But those gotten at 0.07sen has no advantage or anything to happy at all, in fact they are risking themself by either gaining a mere <= 4% profit or making losses, if market goes against them. For a 4% profit is not worth the effort i think. Thomas SM, you got nothing to lose for queuing at 0.065 but everything to gain if you happen to gotten them. Who knows, someone may just sell for no reason like my Genm-CL and Tenaga-CP. :) Now, just have to work hard to get another expiring CW. :)

3. To answer Dav C question on Kossan-CA, yes Davors is correct, the premium is high, better avoid but i don't understand why have to watch out CWs from OSK ?? Is it because they are bad market maker or is it because they don't carry the prestige brand like other investment bank ?

Tracking Maxis Closing Price - Day 2

1. Bought in more SUNREIT at RM1.03 last Friday.

2. Maxis average closing price :-

Day 1 - RM5.39642
Day 2 - RM5.39663

Actual value of CD = ((5.39642+5.39663)/2) - 4.8) / 8 = 0.0745

Buy Call. Next Monday can just buy in at 0.065sen and below. Don't buy at 0.07sen as there isn't much advantage and cushion there. Good luck.

Tracking Maxis Closing Price - Day 1

1. Today MAXIS closed an average price of RM5.3964.

Actual value of CD = (5.3964 - 4.8) / 8 = 0.0745

Keeping this as a record here.

Scalp Trades Dated 23/3/2011

1. Added more AMFIRST at 1.14.

2. Guy, take note of MAXIS-CD starting from tomorrow. Start capturing the average price of mother share. We can start calculating the mother's closing price till Monday and see if it still worth going in MAXIS-CD on Monday. The CW must at least have some premium for us to consider else it is too dangerous to go in as we may not know what will happen to the movement of mother share closing price for the subsequent 2 days. This is a gamble, so in order to lower our risk, we got to buy at premium, at least this will cushion for mother share price to go down for the remaining 2 days. I will blog the closing price of mother share starting tomorrow, we will see by then whether it is worth going in, all you may know, we can earn another 50% return just like Tenaga-CP if you don't mind to tie down your money for 2 weeks. :) No harm dreaming for now. :)

3. Bear in mind that, MAXIS is a super stagnant blue chip stock. So, by buying at a premium on its CW, we are almost assured of winnings. Just standby some money and whack big if you dare. ;) Of course, anything can happen especially during this juncture where some unrest issue in Libya and Japan's nuclear radiator leakage are still in the hit, so if you lose don't blame me, buy at your own risk. Good Luck.

Scalp Trades Dated 22/3/2011

1. Scalp trades today :-

AMFIRST - sold 1.15, bought in 1.14 yesterday

2. Relatively, not so good news for Citigroup as many analyst has envisaged. :(

Giant bank Citigroup yesterday it was announcing a 1-for-10 exchange of its stock, a move that will dress up Citi’s Two Buck Chuck stock price into a double-digit Merlot.

Morgan Stanley found more than half the 236 companies it studied had underperformed the market following a reverse stock split. The underperformance tends to even out over time, Morgan Stanley found, so by six months, average returns are pretty positive. The analysts caution that the results are skewed by a small number of companies with extremely high returns after a stock split.

The upshot? Morgan Stanley says it’s smart to hold off buying Citi shares:

“Given the lag between the eventual positive returns and the reverse split, it is difficult to see the causation. It may be that a higher share price helps to facilitate strong performance once better financial data arrives, or that it takes time for investors to “forget” the old price (and the negative events that went along with that price). Even accepting that the reverse split played such a role, the companies that eventually outperform often suffer immediately following the reverse split, meaning investors would generally be better waiting to invest rather than immediately buying following a reverse split in these cases.”

Fantasy - Earth Wind & Fire

Every man has a place

In his heart there's a space
And the world can't erase his fantasies
Take a ride in the sky
On our ship fantasise
All your dreams will come true right away
And we will live together
Until the twelfth of never
Our voices will ring forever as one
Every thought is a dream
Rushing by in a stream
Bringing life to your kingdom of doing
Take a ride in the sky
On our ship fantasise
All your dreams will come true miles away
Our voices will ring together
Until the twelfth of never
We all will love together as one
Come to see victory
In a land called fantasy
Loving life a new degree
Bring your mind to everlasting liberty
As one
Come to see victory
In a land called fantasy
Loving life for you and me
To behold to your soul is ecstasy
You will find other kind
That has been in search of you
Many lives have brought you to
Recognise it's your life now in review
As you stay for the play
Fantasy has in store for you
A glowing light will see you through
It's your day shining day
All your dreams come true
As you glide in your stride
With the wind as you fly away
Give a smile from your lips and say
Are you free yes I'm free
And I'm on my way

Scalp Trades Dated 21/3/2011

1. Scalp trades today :-

AMFIRST - average in 1.1437, average out 1.1559

2. Saw below news about AMFIRST - rebranding of The Summit Subang USJ.

The Manager has embarked on and implemented in various stages a refurbishment program on The Summit Subang USJ in order to reposition and realign the direction and branding of The Summit Subang USJ. This will allow the retail mall to improve tenant mix and be rebranded with a new image. The right mix of tenancy is vital to attract appropriate category of tenants and hence, enable the Manager to put forward strong bargaining power in future negotiation of rental rates for new tenants or renewal. The repositioning and realignment exercise is also expected to bring/enjoy long term enhancement of rental returns of The Summit Subang USJ.

The repositioning and rebranding of The Summit Subang USJ necessitates selection of tenant profiles by the Manager which may affect the rental income from the retail portion of The Summit Subang USJ. In implementing the repositioning of The Summit Subang USJ, it is necessary to, amongst others:

(i) re-locate certain tenants around The Summit Subang USJ; and

(ii) create new tenancies in favour of new tenants over strategic lots which were vacated by and as a result of the relocation of these tenants.

By reason of the foregoing, the rates of rent payable by these existing and new tenants will vary and revised, where applicable. This will have an impact on the Warranties and Guarantee by BDSB and Meda Inc at the time the SPA was made. Whilst the Warranties given in the SPA were applicable at the time of acquisition, their purpose and intent were somehow negated or became increasingly difficult to monitor and enforce since the relocation and rebranding of The Summit Subang USJ was implemented.

3. TENAGA-CP - The Settlement Price has been determined at RM 6.3000, being the arithmetic mean of the closing price of TENAGA Shares on Bursa Malaysia Securities Berhad for the five (5) scheduled market days prior to and including the market day before the Expiry Date. Cash Settlement Amount

= {(Settlement Price – Exercise Price) / Exercise Ratio} x Number of CW exercised – Exercise Expenses*

= {(RM 6.3000 - RM 6.2400) / 8 } x Number of CW exercised – Exercise Expenses*

= RM 0.0075 x Number of CW exercised – Exercise Expenses*

* Equivalent to 0.30% of the intrinsic value.

It is higher than what i have expected earlier. :)
My % return in fact stood at :-

(0.0075 - 0.005)/0.005 X 100 = 50% !!! (instead of 40%)

WOW !! it is higher by another 10% !!! Where to find such a return in just about 2 weeks time..?

Scalp Trade Dated 17/3/2011

1. Scalp trade today :-

AMFIRST - in 1.16, out 1.17. :)

AMFIRST - in 1.15
CMMT - in 1.08
SUNREIT - in 1.03

2. Bought in a lot of REITs today :) Hope can make some quick money during this turbulent time. :)

3. Dow Jones started with green. Good sign for our local bourse tomorrow ?

4. Just hope that Japan can put the nuclear reactor plant under control. GOD BLESS.

Fukushima Daiichi's Workers Deserved highest Sense of Respect

1. This is what i read ...... "The anonymous workers who remain at the Fukushima Daiichi nuclear power plant — Japanese officials now say there are 180 — fight against lengthening odds to prevent large amounts of radiation from leaking out."

2. These rescue workers are exposing their risk in contacting radiation by trying to bring the incident under control. Certainly their act deserved the highest sense. Respect !!

3. Today scalp trades :-

AMFIRST - in 1.16, out 1.17 (intraday)

SUNREIT - sold 1.05, gotten them at 1.02 (paper gain)

Just received my SUNREIT dividend. :)

4. hng's portfolio :- i regard him as one of the best trader. So far his picks and trades has never failed. Traders should study his strategy and adopting his method, i for one is very interested in his trading skill, would study and analyse his method for my own benefit, maybe in preparation to pave my way as a full time trader in future. :)

Portfolio 1:

1. P.I.E: 92.2% (cost: 4.01)
2. Kian Joo: 85%(cost: 1.80)
3 NCB: 22% (cost: 3.75)
4. Tenaga: 20% (cost : 6.10)
5. RCE: 10% ((cost 49.5 sen)
Portfolio 2:

1. P.I.E: 80% (cost: 4.03)
2. NCB: 15% (cost: 3.78)
3. Kian Joo: 5%(cost: 1.80)

Scalp Trades Dated 15/3/2011

1. Scalp trade today :-

AMFIRST - in 1.15, out 1.16.   :)

2. Market is damn bad lately, can't make big money, so small money also okay lah. hng non-stop surprising me even in such bad market condition also can make big gain there. You have my respect pal. :)

3. Japan quake may cause double dip, says RAM Ratings chief economist. Everywhere everyday also bad news, i wonder how market going to rise. Better stay sideline and don't trade CW.

4. BJToto 3Q net profit up 17.4% to RM114.87m, declares 6c interim dividend , aiyah so little :( better than nothing. :)

5. Japan's nuclear rediator leak worsening :( Japanese stocks plunged more than 14% and i heard it drop till triggering "curcuit breaker". What a day. :(

6. Stock futures all in red. :(

Scalp Trades Dated 14/3/2011

1. Scalp trade today :-

AMFIRST - in 1.15, out 1.16. :)

2. How do i get the average price of Tenaga dated 3/3/2011 - RM6.30790 and the rest ? Get those information here.

3. I use both HLIB and Jupiter. Both power by excel force platform. Please explore yourself. :)


4. GOD bless and save the people of Japan.

March 11, 2011 Japan. Sendai Tsunami

Scalp Trades Dated 11/3/2011

1. Scalp trade below :-

SUNREIT - in 1.01, out 1.02 :)

Nothing peculiar to this kind of trade, just place buy and sell. :) but there is some small trick to it, broker related and no trading skill needed like CW. Just keep repeating the trade, at the end the earning is quite substantial when every successful trades is being accumulated. Experimenting on AMFIRST and SUNREIT, so far 6 out of 6 winning including above. Need lots of patient here. :) If stuck just collect dividend. :) This "trick" may not work at time but high chance of winning, only set back is time consuming. Thin volume also a concern but need to adjust to smaller trade size, can't go for big kill, sometime depend on luck, you may go for 2 rounds of profit. :) Minimum of RM1000 profit per month should be no problem with small amount of investment around RM30K. :) Remember there is no holy grail formula in trading shares, every method has it pro and con. Choosing the right broker is important for this "trick" game. Will keep repeating until it failed me one day. :) Touch wood, so far so good. Chicken feet earning may not suit everyone. :(

2. Finally, bought in CITI at USD4.55. :) 3sen higher than hng :(

3. Japan earthquake, Mid-east tension & oil price all rattles world market. Lucky Dow Jones tonight still steady. :) lofan did the right move by holding cash. Well done.

Scalp Trades Dated 10/3/2011

1. Today sold the followings :-

AMFIRST - bought 1.14 - 1.15 (2 days ago), out 1.16 :)

2. Received my ATRIUM dividend. :)

3. Same old thing, will continue to monitor Bursa-CP tomorrow, if mother share goes up 6sen and above. Just take in Bursa-CP at 0.18/0.185sen else just abort the mission. One should focus only 1 or 2 counters per daytrade, otherwise it is hard to keep track. Good trader or full timer can have more counters, just like hng. ;)

WOW !! 40% Return on Tenaga.

1. Today too busy at work, no time for market. Bad timing. :( With so good sentiment today i should at least make some money through scalp trades. What a waste. :( Hopefully tomorrow the momentum can continue. :)

Ok. Lets calculate the return of Tenaga-CP, as today is the final day. As expected, Tenaga stay flat but it is good enough to make money for me. :) Just too bad that it did not surge high in the final day else the profit would have been bigger. :) Nevertheless, still happy about it.

1) 3/3/2011 - RM6.30790
2) 4/3/2011 - RM6.31737
3) 7/3/2011 - RM6.2598
4) 8/3/2011 - RM6.2978
5) 9/3/2011 - RM6.2971

Actual Value of Tenaga-CP = ((6.3079+6.31737+6.2598+6.2978+6.2971)/5) - 6.24 X (1/8)
= 0.007

% return for now = (0.007-0.005)/0.005 X 100
= 40%

Not a bad deal with 40% return. :) I just hope that we can do the same for Maxis, as this guy is more liquid and steady, so potentially earning should be quite substantial if one can whack huge volume but be prepared to lose as well. Again the chances of lossing is slim. We will see then. :)

2. Tomorrow, try look at Bursa-CP, a) almost zero premium, b) mother stable between 8 to 8.20 for a while, c) market sentiment is good, d) mother down from 9 to now 8.13 down side low, f) very liquid for Bursa-CP, g) still long way to expiry :)

Wait for buy signal from mother share, when mother share goes up say 6sen and above, you can consider take in Bursa-CP at 0.19sen or 0.195sen as the conversion ratio is 6:1. Remember only meant for scalp play, don't keep. Good luck pals. Again buy at your own risk.

Scalp Trades Dated 8/3/2011

1. Today's scalp trades as follows :-

DRBHCOM-CE - in 0.145, out 0.15.... :)
AMFIRST - in 1.14, out 1.15

Will continue to track the actual value of TENAGA-CP as we enter the 4th days :-

1) 3/3/2011 - RM6.30790
2) 4/3/2011 - RM6.31737
3) 7/3/2011 - RM6.2598
4) 8/3/2011 - RM6.2978
Actual Value of Tenaga-CP = ((6.3079+6.31737+6.2598+6.2978)/4) - 6.24 X (1/8)
= 0.0069sen (stagnant at same price)
% return for now = (0.0069-0.005)/0.005 X 100
= 38%

Almost can confirmed making money already if tomorrow Tenaga continue to stay at current price. :)

Return of 38%, virtually if i pump in RM1000, i will be paid RM1380. :) Easy money and very good return isn't it ? Which stock can offer such good return ? Right now like almost risk free, practically just hope for Tenaga to go up higher tomorrow to give me even more profit. :) This money may be insignificant and immaterial to some people but for part timer like me, this can serve my one month lunch money already. :)

2. Try to place a buy order on CITI again tonight. :)

3. There could be another safe and worth looking CW coming. I already mentioned in my previous post, the CW is MAXIS-CD, another steady and bluechip CW, but don't buy it yet. At current price is attractive and trading with negative premium but still not the time to enter as yet. Just keep monitoring and stay tune, i will give the signal when it is ready to enter hopefully.

Scalp Trades Dated 7/3/2011

1. Today i went in Tenaga-CP at 0.005sen, couple of thousand lots, cost me less than RM1500.00 :) Today also the last trading day of Tenage-CP. The next 2 days is very crucial as this will determine whether Tenaga-CP is still in the money and is based on luck on Tenaga's share price as mentioned earlier. Just hope that the mother share can go up further in next 2 days so that we can remain in profit. :) Lets calculate the actual value of Tenaga-CP today :-

1) 3/3/2011 - RM6.30790

2) 4/3/2011 - RM6.31737
3) 7/3/2011 - RM6.2598

Actual Value of Tenaga-CP = ((6.3079+6.31737+6.2598)/3) - 6.24 X (1/8)
= 0.0069sen (obviously has dropped from 0.009sen)

% return for now = (0.0069-0.005)/0.005 X 100
= 38% (still can fetch this high return, not bad)

2. Have placed a buy order on CITI at USD4.48. Hope can get it. :)

Scalp Trades Dated 4/3/2011

1. Scalp trade on 4/3/2011as follows :-

AMFIRST - in 1.154, out 1.164 :)

2. No dividend received so far. :( Yesterday's Citi USD4.50 was not done, will try to place again on next Monday.

3. As peomised, i suppose to blog my call today. Sorry for the delay but this call i make may not be suitable for everyone and it is also not a big deal that everyone will expect to happy about, as the call i going to make may not get it at the desire price at all and it will only last a short life span of one day !!... Yes, no typo mistake here only last for one day but it is a supper save deal about 90% making money, only if one can get at that price. I think i will rather make it an usual sharing here rather than calling it a call from my own perpective.

Ok. Having said enough. This stock that i am refering to is TENAGA-CP, a call warrant. See below for details :-

5347CP TENAGA-CP TENAGA-CP:CW TNB (O)

Type of Securities : Structured Warrants
Type of Structured Warrants : Call Warrants
Exercise/ Strike/ Conversion Price : MYR 6.2400
Exercise/ Conversion Ratio : 8:1
Settlement Type/ Convertible into : Cash
Last Date & Time for Trading : 07/03/2011 05:00 PM
Date & Time of Suspension : 08/03/2011 09:00 AM
Last Date & Time for Transfer into Depositor's CDS a/c : 10/03/2011 04:00 PM
Date & Time of Expiry : 10/03/2011 09:01 AM
Date & Time of Delisting : 11/03/2011 09:00 AM

After gone through the bonus issue, the adjustment has been revised on the conversion price from RM7.8 to now RM6.24. Now, why i rate this as 90% safe bet ?? Very simple, do you notice the last date of trading is falled on 7/3/2011 which is on next Monday. That is why i said it has short life span of 1 day. Lets drill down further. Remember my previous post that i mentioned for cash settlement it is required to derive the arithmetic mean of the closing price of TENAGA Shares on the Exchange for the five (5) scheduled Valuation Dates. Now we know that expiry date is on 10/3/2011 (see above), so the 5 valuation dates of it arithmetic mean of the closing price of TENAGA will be on 3/3/2011, 3/4/2011, 7/3/2011, 8/3/2011 and 9/3/2011.

Lets work out the calculation here :-

5 days Weighted Average Closing Price of TENAGA

1) 3/3/2011 - RM6.30790

2) 4/3/2011 - RM6.31737

3) 7/3/2011 - RM?.?????

4) 8/3/2011 - RM?.?????

5) 9/3/2011 - RM?.?????

TENAGA = RM6.32

TENAGA-CP = RM0.01

Only 2 days we have the values, so just work base on what we have for now. Lets calculate the true value of TENAGA-CP :-

1) + 2) = RM12.62527

Divide by 2 = 12.62527/2 = RM6.31263

TENAGA-CP True Value = (Closing Price - Exercise Price) X (1/Exercise Ratio)

= (6.31263 - 6.24) X (1/8)
= RM0.009

Ok. Tenaga-cp still have value of 0.009sen after settlement, so what should we do ?? Of course, assuming if you buy now at market price at 0.01sen, we will immediately lose (0.01 - 0.009) 0.001sen, that is 10% lost there. :(

This is what i am going to do on Monday, i will place a buy 0.005sen on Monday. A bit of luck here, there maybe people willing to sell 0.005sen as some might not want to go through the settlement hassle or could be due to all sort of reasons when they are selling. We have nothing to lose if no one willing to sell to us but we have many to gain if we strike it at 0.005sen, that is immediate 0.004sen gain and equivalant to 80% gain there. :) So, shall we end here the story ? not so fast. Happen that if you got it strike at 0.005sen, the first thing you need to do is to immediately place a sell order at 0.01sen, just hope that TENAGA go up crazy like bull and you may get your sell order done at 0.01sen :) that is 100% gain there you know ? Just hope that it is perfectly happened as what i have thought. :) ha ha ha

But, we still have 3rd, 4th and 5th days to deal with on TENAGA's price, what happen market in deep shit and TENAGA plunge. Lets calculate the risk :-

First, the trick is you only got in right after the second session of the market on Monday, because, you still can calculate the 1st half session of the weighted averge price, if it drop like 10sen to RM6.22, then you can forgo the mission. If it stagnant say between RM6.30 - RM6.32, then you can try your luck to place your order before the market resume in 2nd half of the session. Now you left only 4th and 5th day to deal with, honestly, these 2 days are by luck as you can't do much with it. Just hope that market perform.

Lets assume worst case scenario, these 2 days TENAGA drop 10sen, which i think is reasonable judging the history record of Tenaga. So, let wrap up all 5 days figures with the following :-

1) 3/3/2011 - RM6.30790
2) 4/3/2011 - RM6.31737
3) 7/3/2011 - RM6.31
4) 8/3/2011 - RM6.26
5) 9/3/2011 - RM6.21

1)+2)+3)+4)+5) = RM31.40527
Divide by 5 = 31.40527/5 = RM6.28105

TENAGA-CP True Value = (6.28105 - 6.24) X (1/8)
= RM 0.0051

Your cost is 0.005sen and your so call "worst case" still have value of 0.0051sen, a small fraction of 0.0001 profit which practically a breakeven. What if it is the otherway round where Tenaga go high up ?? Then you will be rewarded greatly and handsomely like hng. :) :)

What a big "WHAT IF ?" ha ha ha ...... just a sharing. Good luck pal.

Scalp Trades Dated 3/3/2011

1. Today no scalp trade as well but eyeing some call warrants now. Will blog calls tomorrow, but of course buy at your own risk. So, stay tune.

2. I added more AMFIRST today. :) but no new dividend in my account as yet. :( still waiting patiently.

3. See how sharp the drop of Faber above. Waterfall pattern, chances of rebound is high. :) Dow Jone is very green tonight, just hope that this will spur our local bourse further tomorrow. :) but many a time KLCI always failed us especially on the Friday. Too many unrest thingy happen recently, Egypt, Libya, who's next ? Confident level also down to the drain already. Good luck pal. :)

GENS-CC

1. No scalp trading today. Looking at the current market better stay sideline, unless a better sentiment and clearer direction ahead else i would not buy any for now.

2. Bought in AMFIRST today at RM1.16, expecting the coming DPU to be on end April. :) Received my STARREIT DPU finally. This give me more credit limit to buy AMFIRST. :)

3. Today would like to talk about GENS-CC on request from my shares investment comrade hng. :)

0539CC GENS-CC GENS-CC:CW GENTING SPORE (O)


Listing Information & Profile for Structured Warrants
Instrument Type : Structured Warrants
Type of Structured Warrants : Call Warrants
Description : NON-COLLATERALISED CASH SETTLED EUROPEAN-STYLE CALL WARRANTS
Underlying Stock : GENTING SINGAPORE PLC
Issuer : OSK INVESTMENT BANK BERHAD
Stock Code : 0539CC
Stock Short Name : GENS-CC
ISIN Code: MYJ0539CCLA5
Board : Structured Warrants
Sector : STRUCTURED WARRANTS OTHERS
Initial Listing Information :
Listing Date : 12/10/2010
Term Sheet Date : 05/10/2010
Issue Date : 08/10/2010
Issue/ Ask Price : MYR 0.1500
Issue Size in Unit : 60,000,000
Maturity Date : 07/10/2011
Exercise/ Strike/ Conversion Price : SGD 1.9500
Revised Exercise/ Strike/ Conversion Price : MYR 0.0000
Exercise/ Conversion Ratio : 8:1
Revised Exercise/ Conversion Ratio :
Settlement Type/ Convertible into : Cash
Name and contact details of the market maker (if applicable) : OSK Investment Bank Berhad

First rule of thumb on trading call warrant, never keep them as an investment for long term unless you know the underlying share just about started to run from bottom. Always remember you are dealing with trading not investment, so please refer to my previous posts on understanding call warrants here.

The most for one to keep for call warrant only in term of number of days not keep till expiry date unless you know for sure the mother share just about to start it rally up and having an extremely undervalue price else when you see profit you need to SELL. This is the only right thing to do.

What to look for when trading call warrant ? See what i have it bold above some of the important information before we decide to buy or not. We must understand the relationship between mother share and its warrant, mother go up naturally its warrant will go up, likewise, when mother down warrant will go down as well. Simple logic, but sometime you may ask by how much the warrant will move if mother go up. Just look at the conversion ratio above as a guide, e.g 8:1 mean mother need to go up 8sen rightfully for warrant to go up 1sen. This may not accurately define it is always as such but most of the time it is being used as a guide to guage the moving of warrant (if one don't believe me, can try take a look at one counter with warrant tomorrow), other factor may affect the gap between mother and warrant, like expiry date and conversion price. The other factor also very very very important and extremely important is it Premium. One need to calculate its premium before making a move. The longer period it is, people will willing to pay higher premium, the nearer to expiry date the lower premium it will be. We can't treat warrant as normal share as warrant has very short time frame about 6 months to 1 year, so it is not suitable for long term investment.

Now come back to GENS-CC, let us assess and see what we have for this call warrant :-

A. Let work out the premium first by using the following formula :-
Premium/(Discount) = ((Exercise - Underlying) * Exchange Rate + (CW * Ratio)) / (Underlying * Exchange Rate)
** Mother Share Price (GENS) = S$ 1.93
** Call Warrant Price (GENS-CC) = RM 0.085
= ((1.95 - 1.93) * 2.4 + (0.085 * 8)) / (1.93 * 2.4)
= 0.157
Convert to % = 0.157 * 100 = 15.7%

Note : Premium is the lower the better.

B. Expiry Date = 7/10/2011 still have 219days left, about 7 months.
This is how i give the premium, 1 month i give 0.5% higher, so 7 months GENS-CC should have a premium of 7 * 0.5 = 3.5% for now.

C. Conclusion, fair value for GENS-CC basing from what i rated the premium is 3.5% but currently is it trading at so high premium at 15.7%, so worth to buy ?? you tell me. I will not buy in for now definitely as it is already out of money. Of course, one may say, still long time to expiry, mother will go high up to SGD 3 one day but the question is when ? it may expired but i still stay at high premium, yes, the advantage for now is long time but paying so high premium, who want ?? you stupid kah ?? like i tell you my market price for this house is 35K, i want to sell it to you at 157K. You want or not ?? Common sense tell you not to buy. This we call out of money, but when mother goes up back, my premium reduce, yes, it has to be 3.5% then only i buy in else don't look at it at all.

D. So, what happen you have bought it ?? Nothing much you can do, pray hard for mother to go up before expiry or cut loss. When mother go back up and it trading at right premium i buy back else don't touch. Note that you should always adjust your premium lower by 0.5% for every month passed as it is the time decay we need to deal with, no choice. Doesn't mean now GENS-CC trading at 0.085sen is considered cheap, cheap is in the sense of premium, negative is the best not the price. Remember that.

NOTE : Above just my sharing, may not necessary reflect your situation. You can opt to ignore. Your choice.

Scalp Trades Dated 1/3/2011

1. Finally, i got rid of my maxis-cd. :) Thought of selling it at a loss but luckily it was a profit. Thanks to the great profit/result and dividend declared. :)

MAXIS-CD - sold at 0.065, bought at 0.06

2. Re-iterate the formula of Cash-Settled Call Warrants :-

Cash Settlement Amount = Number of Call Warrants X (Closing Price - Exercise Price) X (1/Exercise Ratio)

** The Closing Price is the arithmetic mean of daily volume weighted average market price of the ordinary underlying mother shares for the 5 market days prior to and including the market day immediately before the Expiry Date.

3. I am eyeing some of the expiring call warrants now, might want to adopt a different approach by sending them for cash settlement exercise. This is one of the method of making money as well (e.g my GENM-CL)but the settlement may be way too long for someone as the money will be tied down there for about 3 weeks time. One of it is Maxis-CD. This guy offer great premium for now but it is subject to 8c dividend going ex on 11/3 where it may pull down the price after going ex. Maxis is a steady counter, hardly has a big swing up or down, if its call warrant keep trading at negative premium, then very high chance we can earn some easy money here. I will blog here whether it is worth going in when the due time come (sometime end this March). Just stay tune.