Category: Money tips Release Date: 2007-03-13
With the new Steel and Vanadium put warrants and put warrants in Wuhan Iron and Steel split share structure reform process to the market, the market for put warrants equivalent to short the market mechanism to revive the controversy. We believe that the introduction of put warrants does not necessarily mean that the formation mechanism of the market short. Put warrant holders have the ability to go short, the key depends on put warrants held by the manner in which settlement.
The so-called "short" refers to a trading strategy, investors sold does not own securities. To explain the "short" in principle, we assume that an investor and broker contact, short 1000 shares of Wuhan Iron and Steel shares. Brokers immediately from another client at a borrowed 1000 shares of Wuhan Iron and Steel shares, and then, as usual in the open market will sell it. As long as able to borrow stock, the investor can maintain his short position, until the investors, brokers unwinding direction. At this point the investor account with the broker's money to purchase 1,000 shares of Wuhan Iron and Steel market shares, then shares of restitution. If the stock price fell during the period, then the investors will profit; the other hand, investors will lose.
The New Steel and Vanadium put warrants and put warrants are real WISCO coupon clearing warrants, which means the holder of the right line must have available for sale securities, this process is equivalent to the first at a lower price from the market to buy securities, and then a higher price (exercise price) and sold them warrants issuer. This is a first Jiancang then the process of unwinding, during which does not involve securities lending relations, and therefore are not "short."
For the post directly to the cash settled put warrants, the right of its line principles are quite different. Warrant holders do not need physical possession of the right of the People's Bank Securities, OK warrant holder the right to process the equivalent of borrowed securities at a higher price (exercise price) and sold them warrants of issuers, and then from the market at a lower price to buy back securities to repay. The line of the right to process as it involves the relationship between securities lending, and the warrant holder a profit during the never actually possessed the corresponding securities, such a process may only be regarded as short.
Can be seen, although the two kinds of put warrants can be profitable for investors and the stock price inverse relationship, but the realization of the mechanism is entirely different. Only cash-settled put warrants it possible implicit short acts, New Steel and Vanadium put warrants and the warrants do not exist WISCO Put "short."
