Wednesday, March 30, 2011

Sapcres may have a bullish breakout

Sapcres has broken above its medium-term downtrend line at RM3.65-3.70. With this breakout, the stock may continue with its prior uptrend. Its immediate resistance is the March 9 high of RM3.74 & then its January 13 high of RM3.90. Based on this, Sapcres could be a trading BUY.



Chart: Sapcres's daily chart as at Mar 30, 2011_12.30pm (Source: Quickcharts)

For those who want to punt on this bullish breakout, you may try the CWs (see the table below). As you are well be aware, CWs are leverage instruments that will give an outsize return if the trade goes your way. If not, it will give you an outsize loss. Both CWs listed below are quite attractive, with Sapcres-CB trading at a discount while Sapcres-CC is trading at a small premium. The difference in premium or discount could be due to the longer tenor of Sapcres-CC, which may be justifiable. Either one is fine in my book.


Table: Sapcres's CWs' terms & valuation
at

2 comments:

  1. RedEagleWednesday, March 30, 2011 4:34:00 PM

    hi :Mr lu,do u think TSM (8842) is good for betting its financial result soon??thank you!

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  2. K CWednesday, March 30, 2011 6:37:00 PM

    Alex,
    I agree with you the call warrants pose a more exciting punt for Sapura Crest with both about the same gearing for CB and CC at about 2.7. However the expiry date of CC is less than a month later than CB and I do not see why CC seems to be more popular and it is trading consistently at about 5% premium over CB. CB, with another 5 1/2 months to expire, is trading at a small discount as mentioned by you. Isn't there a free lunch (in term of free time value)? What do you think of this anomaly?

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