When the warrant is approaching its maturity date, some warrant investors may inquire about the exercise and settlement of warrants, for example, does the exercise need to be reported? How to calculate settlement price? wait. In fact, the exercise methods of each warrant are different. It is agreed in the warrant issuance announcement that investors should pay attention to the contents of the warrant issuance announcement and the exercise advisory announcement, especially the following two aspects.
First, investors should pay attention to the exercise date of warrants. Some warrants can only be exercised on the expiration date, while others can be exercised on the expiration date or a period of time before the expiration date. However, the same thing is that the exercise is time limited, that is, the rights can only be exercised within the designated exercise period, neither before nor after the exercise period. For example, according to the announcement, SFC2's exercise period is the last 30 trading days of the duration, that is, the trading days from May 16, 2008 to June 27, 2008, of which June 23, 2008 to June 27, 2008 is the non tradable exercise period. But investors should remember that only when the warrant is in the price, it is worth exercising. If the expected warrants are out of price on the maturity date, they should be sold before the last trading day. The last trading day is generally the penultimate trading day before the warrant expiration date (subject to the final announcement). For example, China Southern JTP1 It expires on June 20, 2008, and the last trading day is Friday, June 13, 2008.
Second, investors should pay attention to whether warrants are settled in cash or securities. At present, the warrants listed and traded are settled by securities payment, except that China Southern Airlines JTP1 adopts cash settlement.
According to the provisions of the Interim Measures for the Administration of Warrants, if the warrants settled in cash are within the price on the expiration date, the warrant holders do not need to declare on their own initiative, and the issuer will automatically pay the cash spread to the warrant holders within three working days after the expiration of the warrants. The amount of cash spread from the automatic exercise of each warrant is the difference between the exercise price and the settlement price of the underlying securities, multiplied by the exercise ratio and deducted from the corresponding exercise fees. Compared with the exercise price and the exercise proportion, investors are unfamiliar with the settlement price. Many warrant investors have a misconception that the settlement price of warrants is calculated based on the closing price of the last trading day or maturity date of the relevant shares. Taking China Southern Airlines JTP1 as an example, according to the announcement, the cash settlement price is the arithmetic average of the daily closing price of the positive shares ten trading days before the due date (excluding the due date), where, for example, a certain trading day Southern airlines If the trading of stocks is suspended, it shall be pushed forward to the trading day without suspension. If the equity of China Southern Airlines changes ten trading days before the due date, the calculation of the settlement price will be adjusted accordingly. The exercise date of China Southern Airlines JTP1 is June 20, 2008, the expiration date. Assuming that the average daily closing price of the positive shares of China Southern Airlines ten trading days before the expiration date is equal to 7 yuan, which is lower than the exercise price of 7.43 yuan, the cash spread obtained by the automatic exercise of each warrant is (7.43-7) × 0.5=0.215 yuan (the exercise fee is not calculated). Therefore, it is not difficult for investors to understand that if the settlement price of China Southern Airlines shares on the maturity date is lower than the exercise price, the stock price of China Southern Airlines needs to fall from the current price of more than 10 yuan to below the exercise price before the maturity date, and it may require the closing price of several trading days to be below the exercise price. Investors should carefully consider the possibility, so as to make correct decisions. In addition, it should be reminded that if China Southern Airlines JTP1 is an in price warrant when it expires, the exercise clearing date and settlement date are both June 23. In order to collect the exercise funds, relevant investors should not handle the designated business on June 23.
Warrants settled by securities payment cannot be exercised automatically. Warrantholders must actively submit the exercise declaration on the exercise date, and the account of the warrant before exercise needs to be fully stocked with cash. The stocks obtained can only be operated on the next trading day after the exercise. Therefore, the holders need to face the risk of fluctuations in the price of the shares during the period from the exercise date to the receipt of the shares. If you hold a put warrant settled by securities payment, you must deliver the principal shares on the exercise date to complete the settlement.
There are many aspects that warrant exercise should pay attention to, and investors should pay close attention to the indicative announcement of warrant exercise. (Risk tips)
GF Securities Product Innovation Department
