Warrants are the most basic financial derivatives, which are issued by the issuer of index securities or a third party other than the issuer. The agreed holder has the right to purchase or sell the underlying securities from the issuer at the agreed price within the specified period or on a specific maturity date, or to collect the settlement difference in cash settlement. We take Sinochem CWB1 as an example to help warrant investors understand the concept of "right" in warrants from three aspects:
First, the 'right' of the warrant refers to the right of the holder to exercise. According to the closing data on December 11, Sinochem International The closing price is 20.24 yuan, and the exercise price of Sinochem CWB1 is 6.52 yuan. Then, assuming that Sinochem International's share price is still 20.24 yuan during the exercise period, regardless of transaction costs, if the exercise is successful, Sinochem CWB1 holders will generate a book exercise income of 13.72 yuan per warrant (20.24-6.52=13.72).
Secondly, the 'right' of the warrant holder has a time limit and is invalid when it expires. Sinochem CWB1 started the exercise on December 11, 2007 and ended on December 17, 2007. The warrants that have not been exercised on the exercise termination date will be cancelled. For investors who still hold the warrants during the exercise period, they should actively exercise the warrants before the termination date of the exercise, otherwise the Sinochem warrants that have not yet been exercised will be cancelled, and the warrants will have no value at that time.
Finally, warrant holders' 'rights' are reflected through physical delivery, rather than directly obtaining the price difference. The settlement method of Sinochem CWB1 is securities payment. If an investor holds 1000 Sinochem CWB1 shares, he/she must prepare the available funds of 6520 yuan (exercise price 6.52 yuan × 1000 shares) in his/her account, as well as a certain amount of stock transfer fees and commissions, and then carry out the following operations in the trading software: "buy" (consigning direction) - "582011" (exercise code) - "1000" (Number), the shares obtained through successful exercise can be listed and traded on the next trading day.
( citic securities ）
