Call Warrant updates as at February 9, 2007

This week's CWs' price movement vis-a-vis their underlying shares' price movement has certainly failed to give a true picture of the sharp swing in their prices. From Table 1 below, CWs' prices have increased by an average of 2.71% from February 2 while the underlying share prices have gained by an average of 1.84% during the same period. The CWs' prices have peaked on Monday or Tuesday and they have dropped off quite significantly from their peak. The same goes for the underlying shares' prices but their decline, as expected, is smaller in percentage term.


Table 1: Changes in Call warrants' prices, underlying share prices & premium from Feb 2 to Feb 9

From Table 2 below, we can see that the majority of the CWs are trading at or below 6% (my rough guide for what's a reasonably-priced CW). Those above the 6%-mark are mostly the new CWs with a few exceptions such as Airasia-CA & -CB, MISC-CA, PLUS-CA, Proton-CA & YTL-CA.

While many CWs look very attractive, is this a good time to buy them? Is the low premium an indication of their future price expectation as well as those of their underlying shares? Only time will tell.



Table 2: Call warrants' intrinsic value & premium as at Feb 9