Hmmm... the latest scam to suck in the lemmings ...
The CBAWOM saga continues and as a keen observer of the depth I have witnessed a pattern of behaviour by MM which is both concerning and worthy of a mention here for Warrant Traders ...
Friday: The opening quotes (by MM) are $0.004/$0.007 ... CBA rose quickly on open to $27.48 or up 1.4% and Warrant quote is DOWN.
For those who crunch their own BSOPM numbers, here are the I/Vols for this week ...
31.25% 28.00% 26.75% 26.25% 25.50% ... you can see the problem ... 31.25% to 25.50% translates into a 65% premium claw-back ... you simply have no hope.
For the week, CBA up from $26.56 to $27.45 (at time of this exercise) or 3.35% and CBAWOM quotes down 50% ... if you're in you are buggered.
But there is more ...
Have been observing both Bid/Ask and specifically recently the Ask side and noted the closing of the spread to $0.001 to entice BUYERS thinking they are getting a bargain and then 'shutting the gate'...
Yesterday/today was typical .. opened this morning DOWN (of course) and mid-morning with no sales, closed the spread from $0.004/0.007 to $0.004/0.005 ... quickly sucked in 900,000 and quick as a flash ramped back to $0.007.
That poor schmuck has just been screwed for about $2000 as we speak and doesn't know it ...
Other Traders will see the Volume and be enticed to follow suit ...
This practice by the MM is pro-active strategy and becoming a regular feature ...
This is a TRAP for Traders ...
Having sucked in the numbers ... then manipulate the I/Vol and quotes to their advantage ...
Quotes in the last week have little relationship to movements in the underlying or BSOPM modeling (as the I/Vol numbers above show...) which the Warrant Market depends on for confidence ...
Warrant Traders need to know that this practice is LEGAL ...
And with no watchdog ... it is carte blanche.
CONFIDENCE in the Warrant Market is imperative and upon which we all depend ...
NO CONFIDENCE EQUALS NO MARKET ...
The Warrant Issuer's need to lift their game ... if we pick winners ... we are entitled to get paid.
I have written to both the Issuer and the ASX ... a prompt reply from the Issuer and with an undertaking to investigate the matter early next week ... not holding my breath.
If you strike an I/Vol and the market moves then pay up ... don't scum it (I/Vol) repeatedly overnight to avoid paying up.
It is called a FAIR GO ...
If Warrant Issuer's are not prepared to pay up ... then get out of the marketplace ...
This is only my (disgusted) view ... read the red stuff.
