Why is PROTON-CJ trading at High Premium even after GO announcement?

Written by Editor

When DRB-Hicom made a general offer for Proton shares at RM5.50, those punters who bought Proton call warrants which were trading at a high premium suffered due to the collapse in time value.  Buyers of warrants should avoid those warrants whose underlying shares have a high chance of being taken over especially if the warrants were trading at relatively high premium prior to the offer being made.  In the announcement of Proton offer by DRB-Hicom, the offer price was only 2.8% higher than the weighted average price of the last 5 trading days prior to the announcement.  The offer price was also only 12.7% higher than the one-month weighted average price of Proton but some of the Proton structured call warrants were trading at premium in excess of 20% prior to the announcement of the offer.

 

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