The residential market resurgence had been in the headlines lately, developing the interest for property counters.
For various traders, a way to put huge bets on property market that is currently reviving is loading up on covered warrants that are issued on big developers.
Many have their focus on CapitaLand, whose half-year results is about to be released on Thursday.
A call warrant is set by Macquarie Bank for those who see growth in CapitaLand. This will give the holder an option to buy into the company’s stock at $3.80 until November. The call warrant is considered ‘in the money’ since its strike price is much lower than the current price of CapitaLand. The counter ended last Friday at $3.97, with an eight cents increase from the previous. It also increased the CapitaLand’s total gains to 17.1 percent for the past two weeks.
Thus, the price upward movement of CapitaLand will probably have an accompanying similar gain in the warrant price of the company.
For shareholders who believe a correction can be applied to the counter after the company’s rally in the past weeks, a put warrant has been set by Macquarie Bank, in which an option is given to a holder to sell stock at $3.70 until December. With this, any decrease in the price of CapitaLand has an accompanying gain in the price of the warrant.
It may still be note-worthy that property analysts are becoming more bullish towards the stock.
Recently, CLSA raised its CapitaLand target price from $3.65 to $4 to consider any upside that may be acquired by a developer from the acquisition of a new residential land-bank.
“While it is obvious the company has missed its first-quarter bottom prices for asset acquisition, we believe China still presents the company with a better avenue to access growth, when compared to Singapore”, the company said.