GF Securities Product Innovation Department, the primary dealer of warrants
Recently, the media reported that three fund companies made mistakes in the operation of the convertible bonds on the power grid, resulting in a loss of 22 million yuan due to ignoring the redemption terms of the convertible bonds. This event has once again alarmed investors. Derivatives such as convertible bonds and warrants have different terms and investment laws from stocks. Investment risk may not only come from the difference between buying and selling prices, but also may be caused by investors' lack of in-depth understanding of the characteristics of these derivatives. Investors need to pay special attention to the operational risk that this difference may bring. Coincidentally, the two warrants expired at the beginning of this month -—— CMB CMP1 and Guodian JTB1 Although the media and the issuer have repeatedly reminded investors through various channels not to exercise their rights wrongly against CMB CMP1 and remember to exercise their rights against Guodian JTB1, according to the published announcement of exercise results, there are still 4851 CMB CMP1 wrongly exercised rights, and more than 960000 Guodian JTB1 have not exercised their rights, resulting in considerable losses.
Warrants essentially give investors the right to buy or sell positive shares at a certain price. For subscription warrants, if the positive share price is higher than the exercise price when the warrant expires, generally speaking, the best choice for investors holding warrants is to exercise, unless investors expect the positive share price to fall sharply below the exercise price in a short term. Similarly, for put warrants, if the price of the underlying stock is lower than the exercise price at maturity, it is generally advantageous for investors to choose to exercise. Take Guodian JTB1 due on September 5 as an example, its exercise price is 4.77 yuan, that is to say, investors holding this warrant have the right to buy it at 4.77 yuan during the exercise period Guodian Power However, the stock price of Guodian Power was more than 15 yuan from the end of August to the beginning of September, and the positive share price was far higher than the exercise price, so it was absolutely favorable for investors to exercise their rights. Assuming that the investor obtains the shares of Guodian Power by exercising on September 4, and sells them at the closing price of 16.43 yuan on September 5, the income from the exercise of each warrant can reach 11.66 yuan (16.43-4.77). Based on this calculation, investors missed a total of 11.28 million yuan of potential income from more than 960000 Guodian subscription certificates that had not been exercised. Similarly, if CMB CMP1, which has no exercise value, wrongly exercises, buys CMB from the market at a price of more than 30 yuan, and then sells it to the warrant issuer at an exercise price of 5.45 yuan, it is obviously unreasonable. It can be seen that understanding some warrant knowledge, recognizing the exercise value of warrants and avoiding operational errors are important links to ensure investment results.
