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.