KS aims to join top 3 in DWs

Kasikorn Securities (KS) expects to climb into the top three among derivative warrant (DW) issuers this year from the top five at present, says deputy managing director Sutthisit Jamdee.

“We hope our DW trading volume will double this year because of newly designed DWs,” Mr Sutthisit said.

The company has intentionally designed its DW products to have a low time value so that its value will decrease more slowly than usual, allowing investors to hold onto the units for longer.

Generally, DW products trading on the market structured by other securities firms are designed to have a high time value, resulting in their short lives.

A DW’s value will drop in line with the time value fixed by the issuer, so if the time value is high, the value will decline accordingly.

Investors who put their money into the instruments must closely keep track of the underlying stock of the DW series they are investing in.

The call option of normal DW products in the Thai shares market is six months on average, but investors keep their investment units for only three to seven days.

“The risk is really high, with some investors buying and selling within hours, not even holding on for a day, but the returns are really high too if investors buy the right ones; if the underlying stocks jumps on cue,” Mr Sutthisit said.

“It’s possible to make a 300% profit on one’s investment,” he added.

The new DWs that KS has designed have a call option of seven months, which technically means that investors can hold units not longer than one month — slightly longer than the period for DWs issued by other firms.

The top players in the DW market based on volume trading at the end 2016 were Bualuang (46%), KGI (21%), MSTL (13%), ASP (7%) and KS (4%).

Mr Sutthisit said that the first series of new model DWs was launched in July last year, resulting in the KS’s share of the DW market jumping from 1% to 4% within six months.