Category: Money Tips Date: 2006-08-22
Shanghai Stock Exchange, recently said that the SSE is speeding up research warrants trading rules, the development of risk prevention measures and carry out the corresponding technical preparation. Once the time is ripe, the market will be officially launched. Warrant is a kind of investment products? Investors in the operation should be prepared to do what?
Confirmed the right to contract
Warrants is the issuer and the holder of a contract between the holder at the appointed time, the right to agree a price to buy or sell the underlying asset. The underlying assets can be stocks, it can be a basket of stocks, indices, commodities or other derivative products. Time divided by the exercise of warrants there are two kinds of European and American. European-style warrant provides the holder is only entitled to when they arrive at the appointed time the sale of the underlying asset, while the American-style warrant allows the holder of the appointed time to arrive at any time prior to the exercise of the rights of the sale of the underlying asset. Warrants of different products can be classified in accordance with the issuer of equity warrants and covered warrants.
According to information released by SSE, warrants product is one of the products internationally mature means in accordance with a specific price within a specific time to buy a certain amount of the underlying stock option certificates. Experts point out that the warrant products and combine-tradable share reform will help solve the lack of reform in financial instruments, such issues as a single reform program for the pilot companies and investors to provide more choice of tools.
Operation of new products, changes triggered
Warrants and other derivative products in the upcoming case, investors should actively change their operating strategies in order to invest in new products among the invincible.
First, we should pay attention to the positive stock warrants issued to bring the arbitrage effect. Issuance of warrants of China's Hong Kong and Taiwan cities empirical studies have shown that issuing warrants declared on the underlying stock price will indeed have a significant positive abnormal returns, indicating that a positive stock warrants issued approval of an arbitrage opportunity. On the Hong Kong Stock Exchange listed 108 warrants tracking results show that the announcement day corresponds to the stock warrants turnover significantly larger, and the next day reached the maximum.
Second, investors should attach great importance to warrant leverage. Generally speaking, the absolute price is low, the absolute price changes warrant will be less than the corresponding stock (being shares) price changes; but relative to its own low prices, the percentage of its rise and fall times can be a positive shares to 10 times, its good leverage may be vulnerable in the storm.
Finally, note that investors should not warrant as an independent securities, solely for the sale of warrants to enter the market. We should focus on the analysis of the corresponding stocks. Only now when the share price is low, he should be considering the purchase of the corresponding warrants. If stock prices are high, buy warrants will face a certain loss.
