Category: Money tips Release Date: 2006-12-23
Warrants listing is expected this week, investors should not invest in the warrants, what the risks? Once the warrants to institutional investors, opening, will not create institutions to price-fixing? With these questions in an interview, executive vice president of China Merchants Fund Management Co., Ltd. Long War. Long power reserve price 1.8 yuan Paul Warrants
Long War that warrants Yangtze Power's program does not belong on the price of the measures, only the two tied the vote. Yangtze Power of the warrants because the company's line to the right; its implementation will increase the total share capital of Yangtze Power will be diluted earnings per share; Paul at the end of each sale back to 1.8 yuan. In theory, Yangtze Power resume trading after the fall no matter how much share prices, Yangtze Power does not warrant the price of 1.8 yuan lower than the 18-month period in accordance with the discounted value (about 1.74 yuan).
But also because the C of E has Paul at the end of a long power value, and therefore subject to price volatility fluctuations is relatively small, the leverage will also have a discount.
Baosteel Warrants price may be down to zero
Baosteel price of the warrant program is part of one of the measures that the Long War is worth noting that Baosteel is the largest shareholder of the warrants are exercised; its implementation will not increase the total share capital of Baosteel will not be diluted earnings per share; no insurance at the end of back to price. As Baosteel Warrants not have insurance at the end of the Yangtze River as the value of electricity, there is the risk of maturity value is zero, so the price volatility is far greater than China Yangtze Power warrants, thus corresponding to the level of risk-reward is far longer warrants a higher power.
Warrants the possibility of being manipulated small
While the view was expressed that once the warrants to institutional investors, liberalization will inevitably lead agencies to share price manipulation, but the Long War is the possibility that relatively small. In his view, warrant, after all, is a kind of derivative financial instruments, its price fluctuations ultimately depends on the underlying stock price changes. Although in theory the existence of warrants and the underlying stock at the same time the possibility of manipulation, but the regulatory authorities or the underlying stock exchanges are usually the size and mobility, there are strict restrictions and strict supervision of trading practices on the circumstances, in practice, the success of the possibility of the implementation of such manipulation was not high. As for the index warrants, the agency virtually no possibility of manipulation.
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Investment Warrants to adhere to four principles
Long War is also to remind investors, however, warrants a leverage effect with the high-risk financial securities products, investors should be treated with caution.
Control positions
To strictly control the investment in warrants positions. Warrants a higher risk species, can not warrant the same position in the stock position to look at, in particular, should avoid all of the funds are invested in warrants. Otherwise, good luck, of course, when a considerable profit, but if the direction of wrong judgments, losses will be relatively large.
Hong Kong has issued equity investment funds invest in warrants, the amount of investment fund assets in general account for only 3% -5% net.
Stop bit
Investment Warrants shall strictly follow the stop-loss principle, once the stop-loss should promptly withdraw from below and not wait for some sort of relief, or try to cover their short positions through the low share of low-cost.
The reason is that the principle of strict stop-loss: first, when the warrants are deep out of the money, its price sensitivity will be greatly reduced, unless the underlying securities rebounded sharply, or almost no sort of relief possible; Second, the warrant value will decrease over time Therefore, a passive position to wait is often worth the candle.
Kuaijinkuaichu
Warrants more suitable as a short-term investment products, position time normally should not be too long. As the warrants prone to sharp price fluctuations, thus the need for close attention to post-purchase warrants and the warrant itself, the underlying securities price movements, if not always stare plate, it should try to avoid investing in warrants.
Do not get petty
To warrant investment, can not "get petty." In other words, do not just because the price of a warrant to buy low away.
For some the price is only a few cents of the warrants (generally out of the money warrants), usually contains a great risk. As time goes by, unless it is the underlying prices of the securities substantially within a short inversion, otherwise the price of these warrants is easy to fall to zero. (Reporter: Huang Jing-tao)
