□ Liu Siling of GF Securities
Recently, investors have received comments Wuliang YGP1 For the inquiry telephone of put warrants, many people asked why at the end of February this year Wuliangye When the stock price fell, the price of its put certificate did not rise, but fell. In actual transactions, many investors will assume that as long as the price of the underlying shares changes in the direction they expect, the price of the warrants will rise. In fact, investors have neglected some important factors that affect the price of the warrants, the most important of which is the exercise price of the warrants and the time from the expiration date.
There is a big difference between investment warrants and investment stocks, that is, warrants have a time limit, and the terms of each warrant will specify an expiration date. Warrants are only valid within the specified time limit, and will be worthless after expiration. The exercise price refers to the price agreed in the warrant terms that the warrant holder will buy or sell the underlying assets to the issuer in the future. Whether the warrant has value when it expires is determined by the normal share price and the exercise price.
For put warrants, if the price of the underlying shares is lower than the exercise price (in price status) on the maturity date, the warrants are valuable; If the positive share price is higher than the exercise price (out of price status), the warrants will have no value at all. Therefore, the actual value of the warrant will return to zero on the maturity date, which is closely related to the price performance of the underlying stock. For warrants that are out of price, investors need to consider the probability that the underlying stock price will become in price within the validity period of the warrant when making investment decisions. If this probability is very small, the risk of buying warrants is high. When the warrants are out of the price and less than two months away from the maturity date (commonly known as doomsday warrants), investors gradually realize that it is a general trend to sell the warrants one after another, and the warrants will embark on the road of accelerated zeroing.
In the case mentioned above, the Wuliang put certificate is only about one month away from the expiration date (April 2, 2008), and it is beyond the extreme price (that is, the exercise price of the Wuliang put certificate is far lower than the market price of Wuliangye). It is almost certain that Wuliangye's share price is unlikely to fall to the exercise price level in the only time before the expiration of the put certificate. Based on the closing price on Thursday, Wuliangye's share price needs to fall 84.7% in the remaining 10 trading days before the put certificate of Wuliangye YGP1 can become within the price. Therefore, in the following days, whether Wuliangye's share price rises or falls, There is no sufficient reason to support the price rise of Wuliang put warrant.
This case also reminds investors who like to speculate on put warrants that are close to the maturity date or extremely out of the price (the exercise price is far lower than the market price of the regular stock). Although the absolute transaction price of such warrants is low and the nominal leverage ratio is high, due to their little chance of becoming in the price on the maturity date, the warrant price is usually no longer sensitive to changes in the price of the regular stock, It is not necessarily close to the price changes of the regular shares. Buying such warrants is actually facing great risks.
Among the last few doomsday put warrants, there were always some investors who saw a huge trading volume and a huge decline. According to their experience in stock trading, they thought there would always be one or two opportunities to bounce back, but the results were often deeper and deeper. Investors should learn from these lessons, avoid the risk of doomsday warrants in a timely manner, and avoid participating in gambling games with no chance of success.
The exercise price and maturity date are only two items in the warrant terms. The investors who intend to participate in the warrant should read the warrant listing documents carefully, understand the terms of the warrant, and understand many other matters worth noting. Warrants are more complex and risky than stocks, and are suitable for investors who have a full understanding of the characteristics of warrants and have sufficient risk tolerance.
