□ Our reporter Ma Tao from Shanghai
If the securities firm that issues the put warrants must buy back and cancel the warrants on the expiration date, then forcing the securities firm to raise the price of the warrants to earn a price difference at the securities firm is a huge opportunity to make money. The problem is that the premise that drives investors to hype crazily does not exist
If you are lucky and brave enough, on June 18, a warrant speculator can easily increase the money in his account by 30% - in fact, more than half an hour is enough. On that day, CMB put warrants（ CMB CMP1 580997, SH) opened nearly 30% low, but soon recovered the lost ground.
If imagination is rich enough, huge wealth may have been collected earlier. In 10 trading days, what is the way for an investor to change 100000 yuan to 1.3 million yuan? In the era of warrants craziness, the answer is very simple: just buy 100000 yuan of CMB put warrants on May 29, and then wait until June 12 to sell them. It seems that the huge wealth growth can be achieved by the three simple steps of "buying, holding and selling", which makes this "stock" with a strange name become the market darling in a blink of an eye. In fact, under the T+0 trading system, if investors repeatedly buy, sell and buy, the return is more likely to reach tens of millions.
In addition to the CMB put warrants, there are four other put warrants in the Chinese stock market that are currently in favor. When the stamp duty was suddenly raised and the market suffered an unprecedented slump, these five small things were all about one yuan. Without exception, if God helped them, they expanded into giants in the twinkling of an eye. At the stage of the market crash, buying any put warrant could earn several times the income.
People rush in regardless of everything, forgetting that there is often a line between the myth of wealth creation and the tragedy of huge losses.
"Wealth only belongs to imaginative people"
The put warrant refers to the securities issued by the issuer that the agreed holder has the right to sell the underlying securities to the issuer at the agreed price within a specified period or on a specific maturity date. A put warrant is a put warrant. On the contrary, the warrant is a kind of call warrant, and the person holding the warrant has the right to buy regular shares at the agreed price.
Thus, when the market plummets, it is logical that the put warrants that are bearish suddenly rise as a whole - the value of the put warrants is reflected in the decline in the price of the underlying shares.
What is illogical is that the price of put warrants rose far more than the price of regular shares fell.
The positive share price corresponding to the five put warrants is far away from the put price, that is, in this case, the five warrants will have no exercise value. When the exercise period comes, the warrants held by investors become waste paper.
Taking the put warrants of China Merchants Bank as an example, its representative right is: from August 28, 2007, the holder can sell one warrant plus one regular share of China Merchants Bank to the warrant issuer at a price of 5.48 yuan, even if the share price of China Merchants Bank at that time was 0.01 yuan. However, the current share price of China Merchants Bank is about 24 yuan. If you exercise your rights, it means that you will sell the things you paid nearly 30 yuan to buy back at a price of 5.48 yuan.
The highest price of China Merchants Bank's put warrants is 4.949 yuan, and the implied expectation is that the positive shares of China Merchants Bank will fall below 0.531 yuan on August 27 (exercise price 5.48? Warrant price 4.949). Only when the stock price of China Merchants Bank held by investors falls below 0.531 yuan can investors holding China Merchants Bank put warrants be profitable. However, this is almost impossible. When the share price of China Merchants Bank is climbing up to about 24 yuan, there are almost no accidents that can suddenly pull its share price below the par value.
However, the CMB put warrant is not the most ridiculous one. The price of three of the other four put warrants in China's securities market is expected to fall to a negative value. Since there can be no commodity traded at a negative price in the world, it can be said that the Chinese stock market created a miracle in human history in the first ten days of June 2007.
Unfortunately, rational analysis is eclipsed by the craziness of the warrant market. For most of the past three weeks, those who despise "logic" have achieved unprecedented investment success.
The desire for wealth ignites people's endless imagination. Many people firmly believe that in November 2006, the situation that the put warrants of WISCO staged a 6-fold increase on the last trading day will return. Wealth belongs only to imaginative people, who firmly believe.
Who will pay the price for madness
How crazy can imagination make? In the short three weeks from May 29, the total maximum market value of five put warrants was close to 30 billion yuan.
Since these five warrants will expire one after another in the next two months, from the current stock price of the five warrants, it is impossible to fall to a very low price when the expiration date is approaching. This means that the five warrants will not have any exercise value, and there is no doubt that their value will return to zero before expiration. Those who sell warrants before the maturity date may make a profit, while those who still hold put warrants on the maturity date will lose their part of the warrants.
Twelve years ago, the "3.27" national debt futures crisis, which has so far left old investors with lingering fears and made the regulators finally decide to stop the trading of national debt futures, involved only a few billion yuan of capital in terms of losses or profits on both sides. Obviously, the risk of warrants in the near future is far greater than that of treasury bond futures in the current year.
The situation is critical. In this case, the only CMB put warrants that could be created were nearly 500 million newly created in a short time under the emergency meeting of the management department. This is because the management has to increase market supply in order to suppress the speculation of warrants. On June 20, another 1.227 billion CMB puts hit the market, which suddenly increased the number of CMB puts by nearly 50%.
With the "powerful medicine" of increasing the supply of warrants, the regulatory authorities also successively offered new administrative measures such as trading suspension, risk warning, temporary suspension beyond the fluctuation range. Unfortunately, these measures had no substantive impact.
"Warrants are like drugs," a large household with more than 60 million yuan said to Southern Weekend reporter. He bought 1 million put warrants of China Merchants Bank with a capital volume of 500000 in a broad mind, and successfully cleared them at the price of 0.8 yuan. But this huge profit did not bring him lasting happiness. Only two days later, he found that it was possible to sell warrants at a price five times higher than 0.8 yuan - his imagination was really poor.
For such a large family with tens of millions of funds, the investment of 500000 yuan only accounts for a few percent of the total funds, and even if it is all lost, it will not cause great impact.
The reporter from Southern Weekend learned from the relevant regulatory authorities that such large investors who participate in the warrant game with a small amount of capital are the main components of warrant traders.
"Up to now, no cases of warrant manipulation have been found in the real-time monitoring, most of which are large households participating in the game with a small proportion of funds." An insider who did not want to be named told Southern Weekend.
More "imaginative" are small and medium-sized investors, who, under the inducement of huge profits, often invest all their funds in warrant trading. "Most of the retail investors who suffered huge losses did not even know what the warrant was, thinking it was the same thing as the stock." This person was deeply distressed. As a derivative of stocks, the value of warrants is directly attached to the value of the corresponding stocks. When the warrants without exercise value expire, their value will return to zero directly.
On the one hand, the relevant parties tried to increase the education of investors and use various means to stabilize the market; on the other hand, "fearless" investors continued to invest in five put warrants. According to statistics, the trading volume of the five warrants even exceeded the total trading volume of all stocks on the Shenzhen Stock Exchange in one day, and the trading scale exceeded 100 billion yuan. Typical examples are Potash JTP1 warrants, which rose 10 times in 4 trading days, and the turnover rate once exceeded 4400% in the T+0 mode.
Someone must be crazy. But crazy people can be divided into two parts: those who make money and those who lose money.
Rule vulnerabilities?
In this crazy warrant game, who is the biggest beneficiary and the big winner who only gains without losing?
Undoubtedly, it is an innovative securities firm that has obtained the qualification of creating warrants.
According to the research report "Warrants Crazy, Brokers Benefit" completed by Liang Jing, an analyst of Guotai Jun'an on June 18, only the 14 brokers who were allowed to create 470 million CMB put warrants on March 15, if these brokers hold these warrants at maturity, they will receive income of no less than 1.5 billion yuan.
In fact, in order to stabilize the warrant market, the Shanghai Stock Exchange agreed that the securities firms would gain more profits after they created unlimited CMB put warrants. Because when a securities firm creates a put warrant, it must use the same amount of cash as collateral. In this way, the closer the creation is to the expiration date of the warrant, the lower the capital cost will be, and the greater the income will be.
In addition, securities companies will also obtain transaction costs ranging from one thousandth to three thousandths in each warrant transaction. In this round of crazy warrant market, the trading volume of warrants has dramatically increased, so this is also a considerable income.
The so-called creation refers to the act that a securities firm that has obtained the creation qualification can issue warrants that are completely consistent with the original warrant terms. The main purpose of establishing the mechanism is to increase the supply of warrants, so as to suppress the high price of warrants caused by excessive demand for warrants. But now, instead of stabilizing prices, there have been profiteers.
Investors have gradually discovered the loopholes in this mechanism.
At present, in various stock forums, the focus of controversy is whether the securities companies must finally "cancel warrants".
This dispute is caused by a sentence in the "Guidelines for the Process of Creating and Cancelling Warrants" issued by Shanghai Stock Exchange: "If the cancellation of warrants fails due to the lack of warrants held by the founder, the relevant departments of Shanghai Stock Exchange shall be notified in writing, and a supplementary announcement shall be made to explain the situation. At the same time, the founder shall bear all relevant responsibilities after the cancellation failure."
Literally, it seems to imply that securities companies must cancel their warrants after they create them. Is there such a big ambiguity in the language as a guiding rule for the market?
Generally speaking, if it is necessary to cancel, it means that the securities firm must buy back the warrants it has sold at the market price regardless of the price. Under normal circumstances, the price of put warrants is close to zero when they are about to expire. Buyback and cancellation will benefit securities companies, which is just the last temptation for securities companies to realize their own interests - most of the previously created warrants were written off before trading was stopped, with exceptions, of course, Baiyun Airport 16 million warrants were not cancelled. However, what the shareholders discussed enthusiastically was whether there was an opportunity to bully the securities companies, that is, to still fry the warrant price on the expiration date of the warrants, so the securities companies that had to cancel the warrants would be forced to buy back the warrants at a high price, and taking advantage of this possible "rule opportunity" would bring huge profits.
The debate on this issue in the forum is extremely fierce, and often starts with the analysis and interpretation of the rules and ends with cursory words. Because of such fierce quarrels, many investors who desperately understand the regulation that is difficult to explain clearly also think that it means "must be cancelled", so they bravely join the power speculation army - does not cancellation failure mean that the number of warrants in their hands is less than the number created, and they must buy back?
The reporter from Southern Weekend consulted with relevant departments and finally got the explanation that "there is no requirement for cancellation." The failure of cancellation refers to the failure caused by problems at other legal levels.
A person familiar with the matter told the reporter that the exchange actually expects the created warrants to be finally cancelled, which is the main reason why almost all the warrants were cancelled before. However, it is precisely this past experience of "basically complete" cancellation that makes the market think that the rule actually requires cancellation. This discovered loophole, after the authoritative department's explanation, became a fake.
However, the small supply and unclear interpretation of the relevant regulations have become the basis of the recent frenzy of put warrants, which cannot be said to be a real loophole in China's stock market.
Another star of this warrant blowout, Potash Fertilizer's warrant will expire on June 22. Both of us knew that its theoretical value should be close to zero on that day, but until June 20, its trading price was still 2.291 yuan, although it had dropped 70% from the peak. Another star, CMB put, fell 40% in the morning under the pressure of Tianliang Creation.
