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NAB, NATIONAL AUSTRALIA BANK LIMITED
colaiscute
post Posted: Nov 17 2003, 04:58 PM
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Would you reccomend buying on the next respected level of support- as indicated by the trendline?





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colaiscute
 
rembrandt
post Posted: Nov 17 2003, 01:06 PM
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Hmmm ... from time to time various strategies involving Warrants/ETO's are put forward suggesting profits can be had as stocks go ex-dividend.

With NAB going ex-dividend one proferred was for a NAB Installment Warrants/Put Option strategy.

I argued elsewhere in response that in my opinion Derivative Markets are efficient and that little if anything in real terms would be gained from such strategies.

Specifically, an Installment Warrant will drop as the Underlying (in this case ... NAB) goes ex-div by at least the dividend amount and Put Options are deliberately SMOOTHED and thus contra any real advantage.

Accordingly, both Installment Warrant/Put Option would result in profit NEUTRAL.

From theMacquarie Warrants we see blatant ramping of Installment Warrants on 14/11/03 as a sure-fire profit potential.

"Aggressive investors looking short-medium term or investing purely for the upcoming dividend period may want the higher leverage provided by the NABIMD, our HOT Instalment."

Such marketing seems to suggest a profit can be made by purchasing Installment Warrants just prior to an Underlying going ex-div and is blatantly misleading.

Today NAB has gone ex-dividend and the following would be the position for those following the above strategy.

NAB last $28.73 for a drop of $0.90 or 0.03%

Installment Warrant NABIMD closed Friday 14/11/03 at $3.15 and last today is $2.25 for a drop of $0.90 or 28.5%

Put Option NAB2M closed Friday 14/11/03 at $0.085 and last today $0.085 .. NIL change.

The Installment Warrant/Put Option has proved to be totally NEUTRAL with no gain to be had.

Some may argue the Installment Warrant franking credit a benefit but I would put the case that this is a tenuous reason for such a strategy.

The conclusion is that Derivative Markets are efficient and no gains can theoretically be made from discrete dividends in the Oz context.


Cheers ... tight stops.




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This is only my view ...
 
rembrandt
post Posted: Nov 16 2003, 03:10 PM
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Hmmm ... two nice SHORT trades which saw us nicely green.

As anticipated and posted elsewhere, the bounce occurred 12/11/03 and we were stopped out as expected.

Went LONG and took profits friday ... ahead of ex-div Monday ($0.83).

Updated chart looks like this...
user posted image

Cheers ... tight stops.







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This is only my view ...
 
rembrandt
post Posted: Nov 16 2003, 12:46 PM
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user posted image



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This is only my view ...
 
colaiscute
post Posted: Nov 15 2003, 06:43 AM
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Posts: 690
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NATIONAL AUSTRALIA BANK LIMITED



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colaiscute
 
 


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