Many people still do not understand clearly What is a warrant?? Good how to play warrants What is it? Let's find out with HVA today.
What is a warrant?
So What is a warrant?? Good What is a warrant stock?? It can be said that a warrant is a type of security that allows the holder to have the right to buy common shares of a business issued at a fixed price, also known as the predetermined price or the exercise price until the maturity date.
And a warrant is a financial instrument in the form of a contract that gives the holder special rights to buy securities and the warrant is often attached to bonds or preferred stocks.
It is known that the warrant will be shown under the warrant code and this is a structured sample consisting of eight characters and is determined according to the listing code regulations on the trading floor of the stock exchange and is used as the name for a type of warrant present on the market.
Generally, when an investor is holding a warrant, they will be allowed to buy shares of a company at a pre-determined price and will not be affected by any changes in the market, be it the value or any fluctuations of the company.
What is a covered warrant?
Besides the question What is a warrant? So the next question that many people wonder is: What is a covered warrant? and is it widely accessible or not?
And warrants are considered a type of security with collateral and issued by a securities company to the market. And the owners of warrants will buy or sell the underlying securities at a predetermined price before a specific time in the future.
Throughout the life cycle of the product, the organization issuing the warrant will always have to maintain a market-making obligation and also hedge against risks according to the regulations of a regulatory agency with the aim of being able to ensure the liquidity of the warrant and also be able to pay investors at the time of maturity. It can also be affirmed that in Vietnam, warrants will be accessed by investors the most compared to other types.
What is the price list of warrants? How to view the price list quickly and accurately
Warrant price list is the place to update all information about the warrant code as well as the current price. And thanks to this price list, investors will have more information to be able to evaluate the health of their investment. And from there, make a reasonable investment decision according to their circumstances. It is known that a warrant price list will include components that need to be considered such as the warrant code, the issuing organization, the warrant expiration date or the reference price, the floor price and the ceiling price.
Basically, the electronic warrant price list will be modeled after the price list of the underlying stock, so it will not be too difficult to read and understand these price lists.
When accessing the stock price list, you have to type in the desired warrant code and then on the electronic warrant price list, information will appear divided into different columns. Specifically, the first column is the warrant code which will be longer than the stock code, the second column is the reference price, similarly the third column is the ceiling price, the fourth column is the floor price and the fifth column is the total trading volume, besides, the next columns displayed are the purchase price, the matching price and the selling price.
Experience in playing warrants to make quick profits
Because the warrant market is diverse and has many investment opportunities for profit, players also need to consider to be able to buy and sell transactions effectively as well as equip themselves with experience in buying warrants as well as the investment knowledge effective, especially for new investors.
Define clear goals
When playing, players also need to clearly define the purpose of investing in warrants, whether to create profits or prevent risks in stock investment.
If the player is the one who makes the profit, the number of warrants purchased will be large and the price will be carefully considered as well as the opportunity to increase the intrinsic value to be able to choose the warrant with the underlying stock code suitable for profitable investment.
If it is a case of risk prevention when investing in stocks, players must withdraw a part of the capital to ensure financial safety as well as use to buy warrants with the corresponding stock code. With this method, investors will be able to limit the risk of loss but still have the opportunity to make a profit if there is an increase in stock prices on the market.
Lifetime of covered warrants
The life of a covered warrant is predetermined by an issuing company. And information about the life of the warrant will be announced in each different issuance. The minimum life is 3 months and the maximum is only 24 months. And one thing is for sure, the longer the life is, the greater the opportunity for investing in covered securities to make a profit.
After a certain period of time, the warrant will no longer have any value, so players will need to carefully consider information about the life cycle of the warrant to be able to choose the right product and invest according to each person's plan and strategy.
Learn about the prices and factors involved in warrants
Players also need to identify the factors affecting the price of warrants to evaluate investment opportunities. Currently, the price of warrants is always affected by different factors. And the factors when fluctuating up and down will also affect the increase and decrease of warrants. Therefore, players need to learn about the market as well as learn the basic information of warrant prices, evaluate and come up with the most suitable investment solutions and strategies.
When investing in warrants, players will receive many opportunities to seek attractive profits, but there are also many risks of loss from market fluctuations as well as from the leverage tool itself. Therefore, players must understand how to play warrants, as well as important factors affecting prices and investment strategies.
How to calculate profit/loss on warrant expiration date
Pre-Maturity Trading
Net profit will be calculated using the following formula: Current warrant price minus purchase price then multiplied by the number of warrants owned.
Trade at expiry
Net profit will be calculated using the following formula: [(Underlying stock price – Exercise price)/Conversion ratio – Warrant purchase price] x Warrant volume owned.
And it should be noted that net profit will not include fees and taxes when trading.
When is it reasonable to invest in buying warrants?
To be able to answer the question When should I buy warrants? First of all, it is necessary to understand some of the different factors that affect the purchase of warrants.
Firstly, it is the market trend, which must be clearly determined because when the market has a clear upward trend, buying warrants at this time can bring high profits to the buyer and vice versa, when determining that the market is going down, buying resale warrants is a more suitable choice.
Second, the longer the warrant's expiration date, the more time investors have to wait for the underlying stock price to move in a favorable direction.
Finally, it is advisable to buy when the warrant is in profit. Because although this warrant is often more expensive than other types of warrants, on the contrary, they have the ability to generate profits more stably.
Hope this information from home HVA can help you find answers to your questions What is a warrant? and information related to warrants. HVA wishes you successful stock investment in the future.
