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Data:2009-12-12 2:34
Investors: Time loss of indicators What is this?
Lee Kum: Theta value is in the other conditions remain unchanged, the decrease on the 1st of each year, warrants the price arising from change, we often referred to as time value loss. Theta value can be absolute, it can be a percentage of the relative Warrant Price (absolute value of Theta รท Warrant price). Apart from some special cases, in general Theta values are negative, indicating that the value of warrants will be reduced over time. And the time value of the loss will be closer as the warrants expiration date and to accelerate its rate of loss.
In percentage terms, the time value on the price of the greatest impact outside the nest round. The reason is that the value of warrants by the intrinsic value and time value component, different exercise price and duration of the situation warrants, the intrinsic value and time value of the size and weight are also different. Price outside the nest round of no intrinsic value, composed entirely of time value and therefore more sensitive to time changes. The price of the nest inside the wheel, because of the intrinsic value of the proportion of larger, less sensitive to time changes, and close to expiration, the sensitivity will be reduced.
Investors, in choosing Warrant should make reference to Theta value of the relative percentage of the price of the value of warrants, that the relative loss of time value because it better reflects the sensitivity of Warrant of time, you can enable investors to better understand the time value the impact of investment gains and losses.