Category: Money tips Release Date: 2006-06-12
In Western financial markets, there is such a word to describe the different types of trading opportunities and risks: middle-class stocks, bonds fried rich, the poor futures speculation. The rich meaning of this sentence is good for the icing on the cake should be invested in treasury bonds, investment risks and opportunities for the middle class should have controlled the stock, while the poor, especially the young in order to change the fate of the poor, then should invest in futures products. The stock market in the warrants is also an options trading products can be a small broad. Now we have to examine the warrants products to investors of the opportunities and risks, and actual operating essentials.
The concept of Warrants
In accordance with the provisions of the exchange, the so-called warrants, is the target of securities other than the issuer or its third release, the agreement holder within the required period or a specific expiration date, shall be entitled to the agreed price to the issuer to buy or sell the underlying securities , or to receive cash settlement of the securities clearing price difference. China's securities market in the past there had been variety of equity warrants - warrants allotment. There are two ways to make money speculation warrants, one line of the right, and second, transactions Change difference.
Investment Case
Suppose a stock "nine square", which corresponds to warrant a "nine square 01." May 9, "nine side" of the price of 7.85 yuan, investors price of 0.50 yuan per share to buy the "nine square 01", and they agreed within 2 months the price of 6.00 RMB per share to buy the "Nine Square" 10000 shares. Case 1: one month later, the "Nine side" of the price rose to 10 yuan, investors have two options. First, the exercise of subscription rights to 6 yuan / share price to buy, "nine party" (the cost of 6.50 yuan / share, well below the May 9 to buy shares of the cost), and then sell the stock to honor; other option is to sell the warrants, because the corresponding stock price rose, the prices of warrants are usually followed up, but the warrant transaction costs are calculated according to the Fund, without payment of stamp duty, far below the stock transaction costs. Case 2: before the expiry of warrants, "nine side" prices continue to fall, such as dropped 6 yuan / share, investors can choose to not work right, while the warrant expires after the loss of value, a loss of investors to a maximum of 5,000 (0.5 × 10000). And if yes May 9 to buy the "nine side", then the investor's loss (7.85-6.00) × 10000 = 18500 Yuan.
The main risk
The main risk of trading warrants:
1, the price volatility risk: low prices due to the C of E species, the total number of usually small, which makes the price there is the possibility of being manipulated, if investors buy in the non-rational price, there is a greater risk.
2, timeliness risk: there is a deposit required to warrant the time, if the warrants expiration date, you hold warrants Tam has no power to bring about the exercise of warrants, the warrants will become waste paper.
3, performance risk: if the main issue because of the special circumstances of default phenomenon, will be subject to the rights of the holders of warrants not exercised, such warrants may be loss of possession.
