Li Songci
The basic operating principle of listed options and warrants is the same, while Hong Kong listed options also have call and put. The difference is that it has more than warrants in one way of investment, that is, long position and short position - that is, call and put options, or call and put options. In the derivative warrant market, investors can only buy call warrants or put warrants unilaterally and cannot short them. Therefore, there are differences in the coordination of strategies.
If investors are optimistic about the future trend, they can consider buying call options, but if they only want to collect option premium, they can also choose to put put options; On the contrary, when you are bearish, you can choose to buy a put option or put a call option; The warrant market can only implement unilateral strategies, buying call warrants when bullish and put warrants when bearish.
However, based on the different terms of listed options and warrants, their trading strategies are slightly different. The trading spread of listed options in Hong Kong is wide, and the circulation volume is not as large as that of the warrant market. Therefore, in terms of trading strategy, investors usually choose to hold options until their maturity when they make the worst plan or avoid excessive trading spread; On the contrary, in the warrant market, due to fierce competition among issuers, narrow bid ask spreads and sufficient circulation, investors can adopt shorter term strategies, or even buy and sell several times a day.
In addition, there are less types of relevant shares available for trading in the Hong Kong option market than in the warrant market. For example, some large shares Both options and warrants have related products, but for some newly listed shares or non first tier shares, there will be more options in the warrant market. Therefore, the investment strategy is also different. The main difference is that when you are optimistic about a positive stock, such as HSBC, if there are relevant products in both markets, investors can first pay attention to which HSBC options or warrants are available for selection, and choose the terms suitable for them.
For example, if HSBC options are cheaper than HSBC warrants, it seems that the former is more cost-effective, but investors should first consider how long they intend to hold before making a choice. If only short-term holding is planned, it is important to change hands quickly. Therefore, the bid ask spread and circulation volume are very important. Warrants can better meet this need than options; However, if the bid ask spread and liquidity are of low relative importance when it is proposed to be held to maturity, investors should compare their prices and other terms. In such cases, HSBC options may be more suitable. Therefore, even if the extension of options is cheaper than warrants in some cases, investors may have to make other plans if they have to consider whether the bid ask spread and liquidity can match.
(The writer is executive director of Goldman Sachs Asia and negotiable securities Director of Chemical Derivatives Department. Disclaimer: The above data is for reference only and does not constitute an offer, solicitation or invitation, inducement, representation, suggestion or recommendation for any investment transaction.)
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