Miss Zhang:
What are call warrants and put warrants? What are the advantages of investment warrants? Compared with stocks, what risks do warrants have that investors should pay special attention to? Ms. Li
Ms. Li:
The characteristics of call warrants and put warrants are shown in the table below:
Call warrant Put warrant
The right holder of the holder has the right (not the obligation) to purchase a specific amount of underlying securities from the issuer at a predetermined price within a certain period of time. The holder has the right (not the obligation) to sell a specific amount of underlying securities to the issuer at a predetermined price within a certain period of time
Return available at maturity (warrant settlement price - exercise price) × exercise proportion (exercise price - warrant settlement price) × exercise proportion
The investment warrant has two main advantages: first, it can determine the maximum risk of investment shares When it falls, the maximum loss of the warrant holder is limited to the total cost of the investment warrant; The second advantage is that you can take advantage of the high leverage of warrants to fully enjoy the benefits of rising stocks when they rise.
Example 1: Using warrants to lock risks
Compare three portfolios of 1000 yuan:
(1) 1000 yuan national debt: obtain fixed income, but can't enjoy the rising stock income;
(2) 1000 yuan stock: you have the opportunity to enjoy the gains of stock price rise, but the biggest loss may be all investments in stocks;
(3) 900 yuan of national debt+100 yuan of warrants: it can not only obtain fixed income, but also retain the opportunity to enjoy the rising stock income; The maximum loss is limited to the total cost of the investment warrant (100 yuan).
Example 2: High leverage of warrants
July 22, 2007 July 23, 2007 Yield
Pangang Steel Vanadium 8.028.8210%
（000629）
Steel vanadium GFC16.337.5420%
（031002）
Warrants are financial products with high risks. Investors should pay attention to the following risks:
(1) The timeliness risk that the expiration value of the warrant is zero: the warrant has a certain period, and the holder should exercise the warrant in consideration on or before the expiration date in time, because the warrant will have no value after the expiration date;
(2) Risk of substantial fluctuation of warrant trading price: since warrant is a highly leveraged product, its price only accounts for the underlying negotiable securities A small proportion of the price may cause dramatic fluctuations in the price of warrants.
As an investor, you must fully understand the warrant products and their risks before participating in the trading of warrants.
Huachuang Securities Changhai Road Business Department
