Warrants Commentary (25 Mar to 29 Mar 2019)
Trading momentum in MYEG-C55 remained strong as the stock continued its volatile run last week. On Monday, the share price of My EG Services (MYEG) tumbled 4.3% to RM1.33, before rebounding 5.3% on Tuesday.
The share price continued its yo-yo trading pattern, closing 0.7% down on Wednesday, rebounding 3.6% on Thursday, then ending 2.1% lower on Friday. Week-on-week (w-o-w), the share price was up 1.4%, closing at RM1.41. Call warrant MYEG-C55 was the most active stock warrant for the week with more than RM10.5mil. traded, an increase of 105.9% compared to the previous trading week. Call warrant MYEG-C65 also caught investors’ attention despite only being listed last Wednesday. The warrant gained 8.0% on Thursday before closing 7.4% lower on Friday. MYEG-C65 has a lifespan of 6 months and will expire on 30 September 2019. In general, longer-dated warrants experience slower time decay, though they have lower gearing levels, which translates to a lower level of risk.
VS-C10, another familiar name in the warrants market, also made it to the top stock warrants for the week with more than RM3.6mil. traded. The warrant was the most active warrant over V.S. Industry, commanding an effective gearing of 2.3x, the highest excluding warrants that are worthless. This means that VS-C10 will move 2.3% for every 1.0% move in the underlying share price, with all else constant.
Meanwhile, warrants over the Hang Seng Index (HSI) continued to represent the majority of trading activity for the week. The HSI had another volatile week, starting Monday with a 2.0% decline, before 4 consecutive days of gain to end the week at 29,051.4, down 0.2% w-o-w. Call warrant HSI-C5A was the most active warrant, tracking the underlying closely throughout the week. The warrant fell 28.2% on Monday to RM0.280 before its slow rebound back to RM0.345 over the week. HSI-C5A is very short-dated and will expire on 29 April 2019.
Investors should exercise caution when trading short-dated warrants as these warrants are at the tail-end of their trading timeframe and will experience the highest time decay. Malaysia Warrants generally discourages investors from trading warrants which have less than one month to expiry. This is to avoid the high cost of holding the warrant i.e. theta.
Visit https://www.malaysiawarrants.com.my/edu?p=timedecay for more information.
Top warrants by value traded:
|Issuer||Exercise level||Expiry date|
|HSI-C5A||85.4||Macquarie||23,200||29 Apr 2019|
|HSI-C5D||58.5||Macquarie||30,000||30 May 2019|
|HSI-H6G||43.9||Macquarie||28,000||30 May 2019|
|A50CHIN-H29||28.6||Macquarie||14.0||30 Sep 2019|
|HSI-H6F||28.2||Macquarie||28,600||30 May 2019|
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To view the full list of structured warrants available on Bursa Malaysia, kindly visit malaysiawarrants.com.my.