Why I choose Apple Call Warrant?

I have missed the opportunity to subscribe to Google Call Warrant which was listed on 14 November 2007. Since then, I asked my Remisier to alert me if there is any good Call Warrant that will be listed in future. On 27 November 2007, my Remisier called me and let me know that there were 4 new Call Warrants that will be listed on 11 December 2007. The closing date was 27 November 2007 (4 pm) and I must deposit money to buy on that day. There are 2 Call Warrants that drew my attention which were: Apple Call Warrant and Exxon Mobil Call Warrant.

I used some time to do my own research on these 2 Call Warrants and below are some comparisons that I made during that day.

Underlaying Share	Apple Inc. (Nasdaq:AAPL)	Exxon Mobil Corp. (NYSE:XOM)
Entitlement Ratio	1200 Warrants to 1 Share	500 Warrants to 1 Share
Exercise Price	USD $171.50	USD $86.00
Issue Price	RM0.11	RM0.09
Premium	20.44%	14.32%

At the first glance, Apple Call Warrant seems like more expensive than Exxon Mobile Call Warrant as it has higher Premium and the issue price for Apple is 2 cents more than Exxon Mobile.

I did some simple calculations as below:-
(Let Currency conversion USD $1 = RM 3.33)

Underlaying Share	Apple Inc. (Nasdaq:AAPL)	Exxon Mobil Corp. (NYSE:XOM)
Entitlement Ratio	1200 * RM0.11 / 3.33 = $39.64	500 * RM0.09 / 3.33 = $13.51
Exercise Price	$171.50	$86.00
Total Amount	$39.64 + $171.50 = $211.14	$13.51 + $86.00 = $99.51
Market Price on 26 November 2007	$172.54	$85.68
The difference	$211.14 - $172.54 = $38.6	$99.51 - $85.68 = $13.83
Percentage difference	$38.6 / $172.54 * 100 = 22.37%	$13.83 / $85.68 * 100 = 16.14%

From the table above, I learned that for the Apple Call warrant to have the value of RM 0.11, the Apple share needs to increase by $38.6 or 22.37% within 7 months while for Exxon Mobil Call Warrant to have the value of RM 0.09, the Exxon Mobil share needs to increase by $13.83 or 16.14% within 7 months. If looking for the calculation perspective, most people will choose to buy Exxon Mobil Call Warrant.

I was pondering for a while on my calculation and I decided to look at the technical analysis of both the shares.


The above was the Apple Chart that I saw on 27 November 2007. The share price was consistently stayed above the 144 Moving Average and it rarely touched the 55 21 Moving Average. To me, it is a very strong Stock.


The above was the Exxon Mobil Chart that I saw on 27 November 2007. The share price was volatile and I think that the share price is heavily depends on the oil price. I did a quick search on CNBC.com for any news on the oil price and I found that Saudi Arabia Saudi oil minister, convinced the rest of Opec to agree an output increase of 500,000 barrels a day, as a contribution to the world’s economic stability. This news might not be good for Exxon Mobil.

As a result from that, I also knew that Apple has many strong products like IPod, IPhone and most importantly the Christmas Day is coming soon! The strong revenue on December could bring the Apple share to the new High which I would expect it to break the Natural Resistance at USD $200. I have decided to buy Apple Call Warrant on that while while my Remisier told me that most of his clients chose Exxon Mobil Call Warrant.

I have a strong feeling that I will be Right. The moment of truth will be in the next few months. I will keep posting update on this.