Call warrants: First expiry & other matters

On January 25 (Thursday), two CWs will be suspended from trading. They are Astro-CA & Scomi-CA, which will expire on January 29. Assuming that the closing level of Astro & Scomi (being the Volume Weighted Average Market Price ('VWAMP') for the 5 days before & including the expiry date) is equal to RM5.40 & RM0.98 respectively (i.e. the closing price as at yesterday, January 22), the holders of Astro-CA shall receive RM0.375 for each unit held while the holders of Scomi-CA will receive nothing. The amount of cash settlement receivable is equal to the difference between the closing level of the underlying share less the exercise price of the Call Warrant, and divided by the exercise ratio of Call Warrant.


Table" Astro-CA & Scomi-CA's particulars & estimated cash settlement

Here, I like to highlight a few points about Call Warrants listed on our exchange:

• Almost all our Call Warrants are American-style options, which are option contracts that can be exercised at any time from the date of purchase (or, issuance) up to and including the expiration date. The only exception is the Basket Call WArrant, ZA-OSKSB, which was initially a European-style option before being converted to a Bermudian-style option. A Bermudian-style option is an option that has pre-determined exercise dates (in the case of ZA-OSKSB, there are 4 exercise dates in a year) while a European-style option can only be exercised at the expiration date.

• 24 of our existing Call Warrants, which numbered 35 as at January 22, are cash-settled. The remaining 11 Call Warrants are physically-settled. A Call Warrant with physical settlement requires the holder to subscribe for the underlying share by paying the exercise price to the issuers. Obviously, this requirement is quite onerous for retail players as most underlying shares are blue chips and, as such, are fairly pricey. From the table below, the physically-settled call warrants are denoted by "#".

Table: CW Pricing Table from OSK188.com