NOL MBL eCW110303, SembMar MBLeCW110303

Bought more warrants this time.

I've read that what I'm doing is speculating (momentum trading), not investing. And yep, I agree with it, I am speculating. :)

In the long run, value investing is my target investment style, however, I'm trying my hand out in momentum investing for now. Reason being, i don't have much money, hence warrants can get me large exposure to equities with just a fraction of the cost, being safer than CFD, yet being able to achieve high percentage gains (and losses.)

Anyway, I made a small mistake today. in buying NOL MBL eCW 110303, i accidentally saw the price wrongly and ordered at a higher price than market rate. hence POEMS transacted my order at the current market price, which was not very attractive. I bought 5 lots at $0.24 each, thus immediately losing about $100 since the buy price dropped to $0.230, inclusive of my brokerage fees.

Anyway, i didnt make the same mistake when buying SembMar a few hours later. I placed my order (and double checked!) at a low price, $0.400. SembMar dropped and i got it at that price.

With regards to Coscocorp warrant that i bought last friday, it went thru a tumultuous week, at one point i lost about 20% of the warrant value when cosco dropped below $2. but cosco seems to have rallied with their announcement of the 2 contracts they received, and I'm hoping that the fabled "SANTA CLAUS RALLY" will help me gain some profits for christmas.

Apparently, December to February has historically been the best months of the year, one reason being that retail investors sell off in dec to claim capital loss for tax reasons, and unit trust managers have to transact to meet requirements. not sure how true these reasons are, but since 1930+, most of the market rallies have been at the year end.

Reason for buying NOL:
Profit and revenue rose YOY consistently, Most of the fundamentals look good, it's PE ratio is around 11, however I'm concerned with its high debt level, at USD 1.3 billion, which is 20% of net equity. Bought the short term warrant instead of the share due to the reasons mentioned above.

Reason for buying SembMar:
Revenue has dropped, yet profit has increased, they are in the running for Petrobras' 27 rig building contracts, debt level is pretty good, yet i can't afford it's share price. sigh...

NOL MBL eCW 110303
Buy price: $0.240
Target profit taking level $0.30
Stop loss level: $0.180 (25% away- loss of $350 incl brokerage)

SembMar MBL eCW 110303
Buy price: $0.400
Target profit taking level : $0.460-$0.480
Stop loss level: $0.300(25% away- loss of $350 incl brokerage)

CoscoCorp BNP eCW110530
Buy price: $0.485
Current price: $0.500
Revised profit taking level: $0.580
Revised Stop loss level: $0.385(21% away- loss of $250 incl brokerage)

In a side note,

Why are brokerage charges so HIGH in Singapore? In the US, POEMS comparable internet trading like E*Trade, TD Ameritrade, Charles Schwab, Fidelity charge a FLAT rate of US 7.95-USD9.99 for non advisory! Why is Singapore so expensive? could be due to Economies of Scale i guess. 

Emotions on the market

As per my previous post, I bought 2 lots of Cosco corp call warrants, which basically means im bullish on cosco. Today, however, cosco corp's share price dropped, at one point by 4 cents, which disproportionately affected the market maker's price of the warrant.

I set a stop loss target for myself at 38.5 cents. Reading alot of books, the authors all similarly and repeatedly hammer the point where you HAVE to bite the bullet and cut your losses. Today, i realised how difficult it is, the emotions that flow thru you when your own money is on the line.

Anyways, this can be construed as me paying tuition fees to Mr. Market for teaching me how to trade.

After all, you have to lose to win.

After a long day of trading, eventually cosco corp traded 1 tick down from Friday. (phew!)

Paper Losses and Warrants

In my fledgling investment hobby, I've made my first paper loss.

The loss is from Sabana REIT. This counter debuted on SGX at 1.00 and closed at 1.02, leaving me with a $30 paper loss (not including my brokerage fees). Oh well, there's still the 8% dividend to look forward to.

If Sabana rises to maybe $1.12-$1.13 (doubt it though), I will sell it off immediately. Reason being I'm not very sold on Sabana's parentage, which is Freight Links, and also the multiple restrictions on Shariah financial products, which is pretty cumbersome.

So for Sabana, my selling point will be $1.12 onwards.
I doubt REITS have a very low support level, since if it drops, the dividend yield is higher, hence the support level should be quite strong.

I also bought my first derivative product on POEMS today.
I bought 2 lots of "CoscoCorBNPeCW110530", KG6W, at $0.485, from the market maker. I was the only buyer of the stock today.
Reasons for buying:
1.) After reading Cosco's 3Q financial statement, it seems to be in a good position, with positive cash flows and increasing revenues and profits. They may also have a few big contracts which will hopefully increase their profit.
2.) 1 lot of Cosco cost $2060 today. Hence, by buying the warrant, issued by BNP Paribas Warrants, i gained exposure to 2 lots of Cosco for a mere $995 incl. brokage fees.


The warrants have an exercise price of $1.68, and is due to be redeemed on 30th May 2011. Warrant:Share ratio is 1:1, hence my break even price (after factoring in all costs including brokerage fees) is $0.51 per warrant. 


My short term view on Cosco is bullish, and hopefully I'll be able to gain some profits in the short term, hopefully before CNY.


The theoretical Delta for this warrant is 0.78, hence, for every 1c the counter moves, the warrant will move 0.78c. Hence, for my target profit taking level, Cosco Corp has to move roughly about 20.5 cents up.




If there's anyone reading, would you care to comment on my buying on this warrant?


Anyway,
Target Profit taking level: $0.65
Self Declared Stop Loss: $0.380 (21.8% away from my purchase price- at this price i will lose $260)