Category: Money tips Release Date: 2006-12-31
The split share structure reforms, to the investors is not only non-tradable shares of major shareholders Major Holders profit, more warrants that have appeared in variety of transactions, to a new trading rules for investors in the transaction.
2005 August 22, Baosteel's publicly traded warrants, while the opening price directly sealed in the limit-position, shows the investors warrants this species sought after and the transition speculation bubbling. With the split share structure reform, step by step, a number of qualified companies launched a program to send warrants as part of the share reform, or simply send the full warrants. In warrants an increasing number of cases, the choice of investors big profit opportunities but also a greater, but the risks are likewise apparent. To want to do a warrant for investors, this article provides some relevant knowledge and operational recommendations, as well as the analysis of individual warrants for investors.
A few questions about the concept of Warrants
C of E, 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 securities clearing price difference. To exercise their rights in accordance with the time division can be divided into European warrants, American-style warrants warrants, and Bermuda. European-style warrant provides the holder only when they arrive at the appointed time, only the right of the right line, while the American-style warrant allows the holder of the appointed time to arrive at any time prior to the exercise of the warrants have the right, while the Bermuda-style warrant is exercisable at a time neither every day, nor day, but a period of time, that warrants investors can exercise the warrants within a period of time given by the right.
To exercise their rights according to the different trading division can also be divided into call warrants and put warrants, also known as call warrants and put warrants. Call Warrant holder is entitled to according to the agreed price within a certain period or expiration date to the issuer to buy the underlying securities, put warrant holder shall be entitled to sell the underlying securities.
Warrants to subscribe for class programs, by issuing warrants to the circulation of the shareholders and give shareholders at a lower flow exercise price of non-tradable shareholders to buy the stock right. Put Warrants type of program by the listed company or major shareholders to tradable shareholders, issuing put warrants, through warrants exercisable at a price to reflect the interests of shareholders of the outstanding shares of the protection, exercise price and the number of outstanding shares, that is the product of the outstanding shares of shareholders in full circulation in the process of returns.
Put and Call Warrants on the difference between a brief analysis of
(1). Held by "are shares + warrants" a combination of different risk. As the call warrants and put warrants on shares of sensitivity is different, as are shares of the increase in warrant price increases put warrants the prices. From the "are shares + warrants" combination of sensitivity point of view, warrants will aggravate the portfolio systematic risk, while the put warrants will be the hedge is part of the risk of fluctuations in share price.
(2). On the circulation of different compensation for shareholders. In the regular stocks falling, the prices of put warrants, would flow to compensate shareholders for losses, thereby reducing the circulating shares of the break-even point; and warrants outstanding shares allows shareholders in the performance of possible future growth story get a cup of soup, but if the stock paste of the right, then the flow in the short term can not give shareholders the amount of compensation.
(3). The value of different maturity. Since the current share reform program contained in the warrants are equity settlement to settlement, which would warrant a major impact on the maturity value. For put warrants, if about to expire, the warrant for-money warrants, or stock price less than the exercise price, the holders of warrants to buy is definitely the right line of stocks, buying pressure may cause share prices to the to move closer to the exercise price, so that warrants the loss of value; As for the warrants, in the approaching period, if the for-money warrants, the holder simply ready to cash in order to major shareholders the right by-line price of buying the stock, rather than A stock's share price on the circulation of an impact. But after the power line, the market can be a sudden increase in the flow of the stock, investors want to take profits as soon as possible, then, is the short-term sell-off hit shares, stock prices will inevitably decline, so that investors suffer losses.
(4). Put Warrants allow investors to build a variety of portfolios, while the warrants on the absence of short selling in the market conditions, the speculation can only serve as a tool for speculators.
Warrants the creation of mechanisms to warrant the price depends on the underlying stock price and its volatility, its price should not be completely controlled by the supply and demand relations. Rising demand in the market, it should be there is some mechanism that allows the timely supply of warrants to be increased in order to stabilize the price spikes. Outside the mature markets are invariably warrants the use of such a "continuous sale" mechanism. To this end, the "Interim Procedures" 29th Article: Eligible institutions may create warrants, warrants to increase the supply of the secondary market to prevent price spikes which warrants a reasonable price from the area.
Warrant analysis of investment operations
First Capital Securities Xiang-Hua Xu Beijing business department manager, is a veteran of the stock market which had fought, he warrants the operation has a unique insight and analysis. Xu general principle is the most emphasized bubbling in the warrant process in line with modest investment and a modest speculative idea of combining to operate. Because, if the pure investment in the case of consciousness, value analysis will deviate from the whole is itself, reason is that the value of warrants is more dependent on its ordinary shares, while the value of the stock analysis can be supported by performance, etc., but it warrants further prices and supply and demand will be affected by the conflict. But purely speculation is not appropriate, in order to get huge speculative gains which often bear the risk is quite large, after all, a day, that is, the stock fell 10 percent, but the warrants are likely to decline within 10 minutes of more than 20%. Therefore, each investor the appropriate amount of money in their own and maturity and their own conduct is allocated in proportion to the investment and speculative, and in time according to the broader market adjustments. Operational concept in the warrants division of the margin of safety, we still wanted to have a benign operation, which is seen to be the appropriate percentage of the interests of timely sell, particularly in the light of the movement of underlying shares and the expected price. For the large daily trading volume warrants, investors also need to bear in mind is that, and they want the sale of other investors, as do the investors are risk-warrants, and they will more or less with gambling, which is why we can not simply treat the degree of risk, in the once lost to rapid loss of stop-loss, as well as for follow-up operation to do adequate preparation. In the technical indicators above, and Xu, general manager also mentioned the 15-minute K-line picture shows the standard is more suitable to do the sale and purchase warrants, combined with a more short-term K-line maps for high and low points, it will reduce costs and increase Jiancang When you sell the benefits. Finally, he also mentioned a very important point, warrants are not suitable for DCA rules to operate, it may in the coming months inside, warrants market has once again is the advent of an unprecedented hot Baosteel able to 0 the value of warrants are exercised, Of course, this is only speculation, and do not represent the true of the stock market results.
