Category: Money tips Release Date: 2007-01-13
Warrants as soon as possible to understand and master the different characteristics of species is that all want to benefit from the transaction warrants investors must pay close attention subject.
We must first understand the basic concepts of warrants. Warrants contain certain basic elements, including issuers, distribution time, the subject matter, warrants type, the exercise price, duration and the exchange ratio, etc., of which warrants particular attention is the type (Call or Put), row of the right price (pay attention to the disparity between the current market price), and deadlines.
From the big side, warrants are generally divided into equity warrants and derivative warrants. Long Electric warrants and warrants Wuhan Iron and Steel is a typical equity warrants. Equity warrants are listed on the company's fund-raising activities. In the exercise of, the listed company will issue new shares and to the exercise price of warrants sold to equity holders. Such warrants expire, the listed company's share capital will generally OK with the warrant holder the right to increase, thereby diluted earnings per share of listed companies. Derivative warrants generally by investment banks, especially the brokerage distribution. Issuers of derivative warrants not to raise funds, but to provide to investors a portfolio management an effective tool. Covered warrants are a kind of derivative warrants, the warrants issued will specify the securities or assets are held in separate trustee, custodian or repository as part of its duty, mortgage, and the trustee, custodian or repository represents the interests of the holders of warrants. Covered Warrants have become the mainstream of the Hong Kong market.
In general, equity warrants and derivative warrants are also available in the market before the expiration of trading. However, the liquidity of equity warrants generally low, and the price comparison can hardly warrants the price of l decreases are likely to deviate significantly from the performance of stocks. On the contrary derivative warrants are usually implemented making system, liquidity is not a problem, warrants greater transparency in pricing, there is a practical leverage and other data for reference, warrants theoretical price decline of l there are data to support. In fact, investors can also see that Baosteel JTB1 warrants, as the first, the absence of making arrangements for the guidance, listing out of the ups and downs since the price deviation from the underlying shares of the stock market now.
If the holder of the rights, warrants can also be divided into the subscription card and Put Warrant. Baosteel JTB1 and long electrical warrants warrants, as well as Wuhan Iron and Steel is a typical warrants. New Steel and Vanadium and Wuhan Iron and Steel shares of put warrant is a put warrant. This means that investors buy warrants, is related to the underlying stock to rise to future profits, but investors buying put warrants, only the future of the underlying stock price drop to make money.
The exercise conditions, the warrants will be divided into European and American-style warrants. American Warrants allow the holder to warrant listing date to maturity date any time between the exercise of their rights, European-style warrants can only be the holder of the date of maturity to exercise their rights, European-style warrants for Hong Kong's most Common types of warrants. In the current four warrants, the Baosteel JTB1 and long electrical warrants, put warrants New Steel and Vanadium is a European-style warrants, while Wuhan Iron and Steel shares of put warrants and call warrants are American-style warrants. That is to say, Baosteel JTB1 and long electrical warrants, put warrants New Steel and Vanadium, after the release, only to maturity to settle in between the general circulation will not change, while Wuhan Iron and Steel shares of warrants, there may be the due date Warrant holders before they are slowly being reduced line right there.
In fact, only a small part of the warrant holders will choose to exercise their warrants, most investors will be sold before the expiration of warrants.
Both warrant or put warrants, they all contain the following main features: First, leverage. 2 is a time-sensitive. This feature determines the time-value of warrants, and the time value of warrants will be with the approach of the maturity date decreases. Third, the holders of warrants and the subject matter to enjoy different rights holders. For the subject matter of the stock warrants, since the holders of warrants is not a listed company's shareholders, so warrants, the holder does not enjoy the basic rights of shareholders, such as voting rights, the right to participate in dividends and so on. Fourth, the special nature of investment returns. Right to subscribe for warrants, if investors price of the underlying direction of movement of sound judgment, will receive the greater the reward.
In addition, since investors can through secondary market trading of warrants, it warrants the price ultimately determined by supply and demand in the amount of buyers and sellers (if the implementation of making arrangements for the sale of the demand is just one of the factors affecting the prices of warrants are shares price volatility is the dominant factor). Investors estimate the warrant price, must take into account the intrinsic value of warrants, the time value, theoretical price, trading volume and other factors, in order to make more accurate judgments.
