December 11 is the last exercise date of the "Steel Vanadium GFC1" warrant. The exercise period of the "Steel Vanadium GFC1" warrant is the trading day from November 28, 2008 to December 11, 2008 (of which December 5, 2008 to December 11, 2008 is the non tradable exercise period), and the warrants not exercised on the exercise termination date will be cancelled.
For the majority of warrant holders, timely exercise of rights and acquisition of positive shares will help them to accurately predict investment income and better arrange investment activities. The last day of tradable exercise period - December 4, 2008 Pangang Steel Vanadium The closing price of the regular stock is 8.80 yuan, and the exercise price is 3.266 yuan. Since the target stock price is higher than the exercise price, timely exercise is beneficial to investors. At the same time, the closing price of the warrants on December 4 was 6.654 yuan, and the exercise ratio of the warrants was 1:1.209, so the cost of each share was 5.504 yuan. Considering that the warrant holder will pay an exercise cost of 3.266 yuan per share when exercising, the cost per share of the stock obtained by exercise is 8.77 yuan, and the cash option of Pangang Steel Vanadium is 9.59 yuan, which means that the warrant holder will obtain 9.35% of the arbitrage income when carrying out the first cash option after exercise.
A better arbitrage scheme is to exercise the secondary cash option. After the exercise of the warrants, if the investors do not exercise the first cash option, Angang Group will give the second cash option to these investors who hold Pangang Steel Vanadium shares two years later. Investors can sell their shares to Ansteel Group at the agreed price of 10.55 yuan, and will also receive cash dividends of no less than 0.12 yuan per share every year. Since the cost per share of the stock obtained from the exercise is 8.77 yuan, discounting the earnings of the next two years to December 4, 2008, it can be concluded that the annual internal rate of return of the stock is not less than 10.99%, which is far higher than the benchmark interest rate of two-year RMB deposits of 3.06% and the average yield of bonds due two years later of 3.65 (about the current market level), At the same time, it is also far higher than the yield obtained by exercising the first cash option.
If the stock market has gone out of the trough and entered the bull market in the past two years, and the price of Pangang Steel has significantly exceeded 10.55 yuan, investors can also choose to sell and cash in in advance. For investors, in the past two years, the yield has been guaranteed and stable, and they can flexibly dispose of their stocks according to market conditions.
It can be seen that there are obvious arbitrage opportunities for the second cash option. In the investment environment where the deposit interest rate continues to decline, the stock market is in a downturn, and the bond market yield is relatively low, the stable and high yield of the secondary cash option deserves special attention from investors.
