Shanghai Stock Exchange investor education column
□ GF Securities Product Innovation Department
After continuous shocks and adjustments in the market, warrants with relatively low transaction costs and leverage effect have become the target of some investors. Moreover, as investors have a certain understanding of the premium rate, actual leverage and other basic indicators of warrants, they can identify the risk level and profitability of warrants from the indicators, Even novice warrant holders hope to use these weapons to try their hand. However, if the option warrants only rely on indicators, it is a matter of putting the cart before the horse. The most important thing for investment warrants is still to judge the trend and price of the positive shares. It is likely to lead to serious mistakes to choose targets by relying solely on indicators instead of judging the positive shares.
Aggressive investors tend to use warrants with low absolute price and high actual leverage to deploy bottom hunting and rebound market. For example, in early March, the leverage of petrochemical CWB1, which was newly listed at that time, was up to twice as high, with low price and new speculation concept, and it is likely to become the first choice of such investors. However, looking back now, petrochemical CWB1 has suffered a lot since its listing, From a high of 3.5 yuan to the current 1.7 yuan, investors were puzzled. The main reason was that the principal shares of warrants fell nearly 40% over the same period. No wonder the price of Sinopec CWB1 was halved. Similarly, investors seeking security may choose warrants according to the criteria of low premium and deep price, so they may choose some warrants at negative premium, but negative premium does not necessarily mean risk-free arbitrage opportunities. If the negative premium is caused by the market's generally weak outlook on positive shares, its correction may be completed by the decline of positive shares, In this way, the chances of making profits on warrants are very small. A typical case is Maanshan Iron and Steel CWB1. In September 2007, Maanshan Iron and Steel CWB1 had a negative premium of up to 20%. Due to the first exercise opportunity in November, the premium rate will tend to zero. Many investors believe that there is an arbitrage opportunity, but later the return of the premium was realized by the sharp decline of positive shares. Before the exercise, the price of Maanshan Iron and Steel CWB1 also dropped nearly 40% from 8 yuan in September to around 5 yuan. It can be seen that if there is no judgment on the trend of the positive shares, it is easy to choose the wrong type of warrants only from the indicators, especially in the case of a small number of warrants at present.
Since warrants rely on derivatives of positive shares, the most important consideration for investment warrants is the trend of positive shares, and indicators are always auxiliary. No matter how beautiful the indicators are, without the cooperation of positive shares, they are just castles in the air. Investors should be aware that warrants are leveraged investment tools. While looking at the right direction can make investment returns even better, the punishment for looking at the wrong direction is also amazing. For example, Shenzhen Development has dropped 40% since its high last year, while Shenzhen Development SFC2 has dropped about 60% over the same period. This may not be acceptable to all investors. At the same time, time risk management is also very important. Warrants are investment products with a time limit. For example, China Southern Airlines JTP1, which is about to expire on June 20, has an exercise price of 7.43 yuan. That is to say, only when the regular shares fall below 7.43 yuan from the closing price of 11.9 yuan on April 24 before the expiration of the warrants, can the warrants have exercise value, otherwise it is a piece of waste paper. Therefore, investors should not only judge the future price trend of positive shares, but more importantly, judge the chances that positive shares can achieve such expectations within the remaining period of warrants in the context of market stability and sharp rebound. In a word, the most important thing to sum up the risk factors of warrants is to judge the direction risk and time factor of the positive shares. If you can't grasp the risk, it is better for investors to look on and not rush into the market. (The article is only for reference, and the profit and loss caused by investment based on it has nothing to do with it.)
