What is a warrant? - Securities Products

A warrantis essentially an option (what is an option?), which is equivalent to holding a virtual right. In terms of the rights of holders, warrants can be divided into subscription warrants and put warrants.


1. Subscription certificate

Give the holder a right (but not a responsibility) to purchase related assets within a specific period at an "exercise price" (usually settled in cash).


2. Put warrant

Give the holder a right (but not a responsibility) to sell related assets within a specific period at an "exercise price" (usually settled in cash).

Investors can sell the warrants they hold before the expiry date. The vast majority of investors will sell the warrant before it expires (investors just see it as an investment tool to gain the price difference, not want to buy this right).

Warrants are all listed and traded on the Hong Kong Stock Exchange, and trading is carried out based on the number of complete "lots", and delivery is carried out two days after the trading day (T+2). In addition to a fixed code, there will also be a series of symbols with special meanings for specific instructions.


3. The meaning of the formula

Take ''3512 Zhongshou Societe Generale 505 (@EC)'' as an example.

"3512" is the trading code of the warrant on the Stock Exchange;

"China Life" indicates that the underlying asset is China Life (2628.H K) stock;

"Societe" indicates that the warrant issuer is Societe Generale, which is the largest warrant issuer in Hong Kong;

"Five Zero Five" indicates that the expiration date of the warrant is May 2005. If the expiration date is September 2006, it is written as "Sixty Nine", and so on, and November is written as "A", 12 The month is written as "B"; "B" indicates that the same issuer, Societe Generale has issued more than one type of China Life Warrants that expire in the same month but with different terms. B is to show the difference;

"@" indicates that cash delivery is used instead of China Life's stock for delivery at maturity. If "*" is used, it indicates physical stock delivery;

"E" indicates European style. If "X" is used to indicate special or non-traditional warrants (see its terms for details), American style may not have letters or may be specially marked with symbols;

"C" indicates a subscription warrant and "P" for a put warrant.

The meaning of the whole expression is "the European-style subscription certificate with the code of 3512, issued by Societe Generale in France, with China Life stock as the target, expired in May 2005 and delivered in cash." Similarly, this warrant can also be written as "3512SG-China Life @EC0505B".