Wednesday, July 24, 2019

GPacket-WB: Stuck in Neutral

Over the past few days, GPacket has risen from 40 sen to 55 sen. Meanwhile GPacket-WB has risen from 10 sen to 12.5 sen. What's the problem?

The main terms of this warrant are:
  • Exercise price: 40 sen
  • Expiry date: 24 November 2023 (1584 days to expiry)
  • Exercise ratio: 1-to-1

Based on the share price of 55 sen and the warrant price of 13 sen, GPacket-WB is now trading at a discount of 3.6%.

Given the sharp rise  in the share price and the discount in the warrant price, it makes sense to take a trading position in the warrant.

Update: This situation will eventually be resolved with either the share price dropping or the warrant price rising. A price convergence will happen when people start selling the shares and buying the warrants or they start to convert their warrants to shares and upon receipt of the shares, they start selling shares. 


Chart 1: GPacket-WB's daily chart as at July 24, 2019_11.00am (Source: Malaysiastock.biz)


Chart 2: GPacket's daily chart as at July 24, 2019_11.00am (Source: Malaysiastock.biz)

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