Share instalment question.

[Jon_Snow]

SB AMS CCT Last Price: 8616c 8538c Move : 78c 116c Move% : +0.91% +1.38% Volume : 116 500 Value : R 9,995 R 44,700 Deals : 3 1 High : 8616c 8940c Low : 8616c 8940c Name : SB AMS R620CCT 1:1SEP09 Issuer : Standard Bank Underlying share : ANGLOPLAT Exercise Price : R 620.00 Expiry Date : 22 Sep 2009 Type : Share Instalment Conversion Ratio : 1.00 Delta : 36.61% Implied Volatility : 65.00% Gearing : 0.00 Weekly time decay (theta) : 0.00% Days To Expire : 292 Last Updated : 03 Dec 2008 With regard the above share. 1. Why is there no gearing ? I thought that instalments(not turbo) in general are a little under 2x gearing usually. 2. I also noted that the "Bid & Offer" column has never had many participants(2 at max) therefore the very few deals 3 and 1 respectively, is there not much liquidity in the instalment? I do remember that Standard Bank is the market maker so there shouldn't be any participants? Thanks

[SimonPB]

it is a busted instalment, go read newsletter #27 (think it is 27). An derivatives are as liquid as the underlying asset.

[Jon_Snow]

Thanks Simon for the quick reply.

[Jon_Snow]

Hi Simon I read over the newsletter(it was 27) and the "busted" instalment makes sense to me BUT what I don't understand is how the gearing can still be at 1.8 should it not be at around 4 (maybe a web site issue )? Angloplat ordinary share 39700c Day comparison : SB AMS CCT Last traded - Thu 04 Dec 2008 09:29 Last Price: 8616c Move : 78c Move% : +0.91% Volume: 500 Value: R 43,080 Deals: 4 High: 8616c Low: 8616c Name : SB AMS R620CCT 1:1SEP09 Issuer : Standard Bank Underlying share : ANGLOPLAT Exercise Price : R 620.00 Expiry Date : 22 Sep 2009 Type : Share Instalment Conversion Ratio : 1.00 Delta : 39.83% Implied Volatility : 69.00% Gearing : 1.86 Weekly time decay (theta) : 0.00% Days To Expire : 292 Last Updated : 04 Dec 2008

[SimonPB]

gearing is easy, divide instalment price into share price = spread.