Biosensors   

Is Biosensors a good buy?

I've heard people say that warrants can be used as a hedging tool. If so, how can I as a retail investor trade warrants for hedging purposes?

First of all we should establish the meaning of the word ?hedging?. Hedging is the process whereby an investor enters into a trade to offset some risk.  Very often this risk may arise  due to an existing holding  of an asset. Hedging is a very common practice in many financial markets and across many different asset classes. For example, if a Singapore investor bought an investment property in another country they will be exposed not only to the value of the property but also to the exchange rate of that country. The investor may choose to reduce the risk of future exchange rate changes by buying a currency swap or something similar, this process is called hedging their risk.

In stock markets hedging can be achieved through a number of different methods. One of the common methods is through the use of options or warrants.  There are two basic ways to use warrants as a hedge, hedging against a ?fall? or hedging against a ?rise? in share price. For example, if you had a large holding in XYZ shares and you were concerned that the share price may fall following an upcoming announcement  but you didn?t want to sell your holding, you could protect the value of your investment against a fall by buying a put warrant over XYZ shares. If your forecast comes true and the share price falls you will make a loss on your share holding. However, the loss can be partially/totally offset by the profit you make on your put warrant holding.

The other common form of hedging is to use warrants to hedge against a rise in share price.  For example lets say that you have a holding in ABC shares and you had to sell your holding as you needed the funds for use elsewhere. You still however have a strong view on ABC and are confident that it will appreciate in value in the short term. In order to hedge against the risk of missing out on future gains you can buy some call warrants over ABC to maintain some exposure to movements in the share price. As warrants are a geared investment you will be able to achieve exposure for less capital than buying the underlying ABC shares. Through this process you have maintained exposure to the underlying shares while getting access to some of your capital for use elsewhere. You have ?hedged? yourself to ensure you don?t miss out on future movements in the share price.

 

 

Bro. Bengster:

No.issuer will used last 5 days closing price to arrange it. 29/10 to 02/11 closing price.

Now BIG 0.93 UPUP!!!!!!!!

FM will come in soon!!!!!!

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price used will be the average of 5 business day before expiry Nov 2,price could be artifically pushed below 95 exercise price to slaughter the call warrants holders ..possible? but i think the issuers are smart to hedge both ways..any financial experts can interpret whether the MBLECW071102 is a call or put warrants?

 

Thanks Bro A02041315 (walau your number hard to remember) and 787180. Covered warrants sounds kelong to me. Is there a motivation for the issuer to manipulate and depress the share price down? For MBL ECW071102, it says submission to be closed at 12 noon on 02/11/07. So the issuer will use the price at 12 noon tomorrow as the market price to determine how much they will pay you (if they ever need to)?    

 

i thought cw meant for leverage, how to to do hedging?

 

2 types of warrants- TYPE 1----one issue by co for its own underling shares normally come free from a rights issue.Co has to issue new shares for each warrant exercised after expiry date,this type is called traditiona warrants.

 

Type 2 refers to MBL ECWO71102 is issued by banks or financial institutions known as structured or covered warrants.No new shares will be issued used mainly for hedging.

 

Eg if mkt price of Biosensor is 93.5 cts ,the warrant holders will lose 1.5cts ,  5 business day ( 95cts- exercise price   minus  mkt price 93.5cts ) this is the call warrants,no new mother shares will be issued

 

If  put warrant exercise price is 95cts upon expiry 5 business days and mkt price of mother shares of Biosensor is 93.5 current mkt price ,then the holders of this put warrant will earn 1.5cts ( 95-93.5cts)

 

Bro. Bengster:

 

Warrants got 2 types ,1 is issue by co.and other by bank,what you mention is co. warrant .            

BIOSENSORS MBL ECW071102 is issue by bank and no need to pay 95cts to get the share bank will take last 5 days arrange price if price above strikeprice the different will pay you back,if below noting to return.

Hopefully afternoon UP!UP!UP! cos still a lot of Fund having BIOSENSORS MBL ECW071102

May be they will jack up price

Good luck!!!!

 

So if it is $1, issuer pay you 5cts net for winning the "bet" against them instead of giving you the shares if you pay 95cts? I thought covered warrant means the holder of the warrant can go to issuer and pay 95cts exercise price and the bank will give you the shares. Of course if trading share price is 90cts, nobody will go and exercise. If trading at $1, a lot of people will go and exercise the warrant. Does that mean the issuer has to "standby" shares for people that go and convert the warrant into shares if the warrant is "in the money"?  

 

Camper :

If BIG exceed $0.95,bank need to pay back the balance:



MacQuarie Bank BIOSENSORS MBL ECW071102

Last Date/ Time to submit Subscription Notice 2 NOV 2007 12:00 noon (Singapore time)
Listing Date 5 APR 2007
Expiry Date 2 NOV 2007

Outstanding Balance 40,000,000
Price ($) as at 2007-10-31 0.005
High for the year ($) 0.340
Low for the year ($) 0.005
High for the month ($) 0.050
Low for the month ($) 0.005
Exercise Price SGD 0.95000

Underlying Stock BIOSENSORS INT'L GROUP, LTD.
Underlying Stock Price ($) as at 2007-10-31 0.960

 

Younglady, i think your question only Tee Kong can answer you. Go and Tiu Chiam should be more jun than asking us.

 

hahha. bengstar i just want to know lar. coz everyone toking here, so i ask my question.

between, how come this stock is rather new and fluctuation like what???? hey ask u all, what u expect this stock to growth by end of today, and how long do i hold

 

Guys,

Its just a test of patience...the warrant saga will continue untill 2morrow and then the price will be back to uptrend.... just hold on to this and you will see it back on track next week... (unless any bad news about CE....) you can see this as a buying opportunity though....

 

 

Younglady don't play contra on this stock or you will eventually die with legs spread apart. For youngman, they will die bird stand!  

 

Don't buy covered warrants lah. 90% of the time we will lose money and the issuer will sure to make as long as they can sell of all their covered warrants. It is manipulative and hard to make this money.

 

A02041315 Member	Posted: 01-Nov-2007 10:51
	BIG MBL warrant is going to expire tomorrow,so bank are pressing down below $0.95(warrant strike price),

 

Can anyone explain why MB would want to depress price, thought whether the price above or below strike is no impt, MB makes money both ways... 

 

usually play contra  within how many days must sell

 

10:54:36	0.940	240,000	Sell Down
10:53:06	0.940	187,000	Buy Up
10:52:53	0.935	5,000	Sell Down
10:52:48	0.935	5,000	Sell Down
10:52:46	0.930	10,000	Sell Down
10:52:44	0.935	93,000	Buy Up
10:52:07	0.935	422,000	Buy Up
10:51:58	0.930	10,000	Sell Down
10:51:56	0.930	25,000	Sell Down
10:51:53	0.930	8,000	Buy Up
10:51:40	0.930	10,000	Buy Up
10:51:29	0.930	200,000	Buy Up

 

 

BIG was listed on 20/05/2005. Biomatrix CE was submited April 2005. BIG expected approval to come in before June 2006 but kena delay until now.

 

I feel this time round CE news is 95% real. The BBs cannot everyday every hour buying non-stop or they will not be able to buy it cheap. I recall on Monday and Tuesday Morgan Stanley was quiet in the morning and bought just before lunch break. After luch stop buying and let price come down and late afternoon after 4pm start buying again. If every hour buy, buy and buy, the retail sellers will know the pattern and stop selling and this stock will go up even faster. There are retail sellers selling 100 or 200 lots. But i don't think any transaction 500 lots and above are done by retail investors. There are a few funds accumulating for genuine long-term holding. Of course there are also some house traders manipulating the market. For the benefit of fellow forumers, can someone here please post the major buy up/down transactions from time to time. Jackjames is right. We are here for CE. Ignore the market fluactuations now. There could be only one main direction now and it will be up north. Some forumers may be tempted to sell now and buy back later today. This intraday trading is not my expertise but we will not know when BIG will call for trading halt. Better don't play play lah...... Now is on BIG's share price is CE rumour, trading halt is CE confirmation. There will definitely be a wide gap up. There could be more genuine institutional investors coming in only after CE approval. Just my opinion 

 

BIG MBL warrant is going to expire tomorrow,so bank are pressing down below $0.95(warrant strike price),

but I think today can exceed $1.00.

 

Good Luck!!!!