Ping An Securities Derivatives Department Xue Pu
Shenzhen High CWB1's contrarian shares soared 25.14%, closing the third consecutive trading limit to view the high premium of new warrants dialectically
On Thursday, the newly listed Shenzhen High CWB1 rose 25.14% sharply, closing the third consecutive trading limit, with a cumulative increase of 140.35% relative to the opening reference price, when the stock fell 3.26%. Guoan GAC1, which was listed at the end of September, also rose 9.71%, hitting a new high since its listing. From the perspective of valuation level, the premium rate of Shenzhen High CWB1 has reached 75.46%, while the premium rate of Guoan GAC1 has reached 87.29%, significantly surpassing other varieties in the market. So, how should investors view this high premium phenomenon of newly listed warrants?
First, premium rate is a relative concept, not an absolute one. It cannot be said that a high premium rate means that warrants are too expensive, while a low premium rate means that warrants are cheap. In theory, the level of premium rate is related to the residual maturity of warrants. In fact, factors such as the supply and demand of warrants and the size of the circulation plate will also affect the premium rate of warrants. Taking the warrant as an example, the longer the remaining term of the warrant, the greater the opportunity to exercise at maturity, the higher the time value of the warrant, and the warrant can bear a higher premium level. The newly listed warrants in China have a long duration, which gives investors more imagination. In addition to the scarcity of warrants in China and the enthusiasm of investors for newly listed financial products, the newly listed warrants are in short supply, leading to a high premium rate. In addition, when the demand is large, warrants with small circulation are vulnerable to capital impact, resulting in a high premium rate.
Secondly, the degree of the warrant within the price is also one of the factors affecting the premium rate. Generally speaking, the premium rate of out of price securities may be slightly higher. For example, the current put warrants are all out of depth, with an average premium rate of 80.31%. The subscription warrants China AnGAC1 and Shenzhen High CWB1 are out of light price, which to some extent also promotes the high premium level.
So, is there any rule for the change of warrant premium rate? In the long run, if the warrant is in the price when it expires, the premium rate level will return to zero or at least close to zero on the maturity date of the warrant. The return method is generally that the increase is less than the theoretical increase calculated according to effective leverage, or the decrease is greater than the theoretical decrease calculated according to effective leverage. However, the return of premium rate level is a process that runs through the entire duration and cannot be achieved overnight. Therefore, it is not appropriate to measure the price of warrants simply by the level of premium rate.
In fact, for warrants with a long residual period, the premium rate level does not have much short-term significance for investors. Generally speaking, when the market is relatively stable, the premium rate level will remain at a relatively stable level in the short term. Therefore, investors who make short-term investments should still decide whether to invest in relevant warrants based on their own views on the trend of positive stocks and their judgment of market enthusiasm. For investors who intend to invest in the medium and long term, they should avoid the subscription certificates with high premium rate and extension amplitude, and may wait for the low point of extension amplitude before entering the market.
In addition, investors should also be reminded that the loss of time value is also a factor that has to be considered when investing in high premium warrants. Especially for out of price securities, although the level of effective leverage is high, the time value is also lost quickly. Once the direction is judged wrong, it will bear a large loss. Therefore, for Guoan GAC1 and Shenzhen High CWB1 out of price warrants that have just been listed, prudent investors should control the risk according to the grasp of the future trend of the positive shares, and should not blindly pursue the high.
