Hi,
Are there any options gurus here?
Why are the options on Bursa so expensive? For example:
Put warrant FBMKLCI-C5V expiring in Aug19 for FBMKLCI at exercise price of 1695 closed yesterday at $0.015. Conversion ratio is 700 to 1 unit of FBMKLCI. let's say I buy 7000 warrants, that would cost 7000*$.015=$105. Brokerage and other transaction costs is another ~$10 so all up $115.
KLCI is now ~1665 so this warrant is out of the money. For this warrant to make any money KLCI would have to move up 30 points to 1695 to the exercise price and then another 12 points to cover the cost of buying the option. So total increase of 42 points which is pretty remote.
My question is
1) why are bursa/klci options so expensive and are there any other products out there which are cheaper, e.g. outside malaysia? I looked at OKLI but volume is almost non-existent.
2) who are buying these options anyway since they are so expensive? I'm guessing large institutions that need to hedge and don't really care about the cost?
Options/warrant question