Bilian Financial Products is an active supplier of derivatives in Asia, providing diversified products, including warrants and structured products, and actively participating in investor education. Please visit Bilian's website for details. Securities prices can rise or fall, and investors may lose all their invested capital. Investors should fully understand the characteristics of warrants and assess relevant risks, or consult professional advisers to ensure that investment decisions can meet personal and financial conditions.
The covered warrant market in Hong Kong, China, has developed rapidly because of the leverage effect of warrants. Secondly, due to the fact that many state-owned enterprise shares came to Hong Kong to raise funds and meet the conditions, the issuer was able to issue relevant warrants in Hong Kong, China, making state-owned enterprise covered warrants more and more active. However, risks and opportunities always coexist. Although the warrant market is active, it is not allowed to enter the market blindly. Before entering the market, it is necessary to make preparations. Opportunities will always be left to those who are prepared. In this issue, we will provide some suggestions for investors on the consideration of warrant investment before entering the market.
The most important thing for warrant investment is to first judge the investment opportunity and determine the capital to be invested at different times, and then select the best warrant investment object. Most investors' losses do not come from choosing the wrong warrants, but from choosing the wrong time to enter the warrant market. What's more, they invest too much money in the warrant market at the wrong time, and then do not have enough risk management awareness. It is better to grasp the investment opportunity first and determine the degree of risk to be borne than to talk about risk management after entering the wrong market. The best time for warrant investment to enter the market is when the market sentiment has an obvious upward or downward trend and the fluctuation of related positive shares has stopped falling and rebounded, so that investors have the opportunity to earn the direction and fluctuation of positive shares. To understand the changes in volatility and market sentiment, refer to the macro data of the market.
We hope investors can strengthen their risk management awareness from the theoretical and market application levels. investment shares The risk only lies in the decline of stock price, but the risk factors of warrants need to be considered at more levels. Even for the warrants of the same stock, different warrants may also make investors suffer different degrees of potential losses due to different technical risks. First, the technical risks of warrants mainly come from three aspects: sensitivity to changes in positive shares, sensitivity to changes in extension amplitude and time value loss. The sensitivity of warrants to common stocks is usually measured by effective leverage, which is where the leverage effect of warrants lies. In particular, investors should be reminded that effective leverage is a double-edged sword, which can amplify both gains and losses of investors. Second, the extended amplitude is one of the factors affecting the pricing level of warrants. Generally speaking, when the difference between the extension amplitude of individual warrants and the short-term historical amplitude of equity stocks expands, the opportunity and amplitude of the reduction of the extension amplitude of individual warrants will increase. Third, another major risk of warrants is that the value decreases with the shortening of the term. Warrants are different from stocks. They have a duration, and as the maturity date approaches, part of the time value of the warrant value will slowly wear down to zero. Therefore, before entering the market, investors are expected to be clear about the extent to which their losses may be magnified. If it exceeds the acceptable range, it is better not to be a blogger.
From the market application level, the warrant price of individual warrants is different from the theoretical price. For example, in the first ten days of May, Hong Kong stock funds were concentrated in oil shares such as PetroChina and Sinopec. Among them, from May 2 to May 8, more than 370 million yuan net flowed into PetroChina warrant, reflecting that the market sentiment of oil related warrants was good in recent days, which made the demand for some oil related warrants exceed the supply, leading to a sharp rise in their extension amplitude, so that their prices rose more than the theoretical increase. After the sharp rise, investors who are now interested in entering the market to buy and sell oil related warrants should pay attention to whether the volatility of the positive shares will decline next day, which will expose investors to the risk of the decline of the extension amplitude.
At this point, investors can enter the market rationally and look for appropriate warrants as the trend of positive shares, extension amplitude and market sentiment change.
Sina statement: The content of this article is purely the author's personal view, only for investors' reference, and does not constitute investment advice. Investors operate accordingly at their own risk.
