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| Copyright 2002.
Information below are provided by SG Securities (HK)
Limited. All Rights Reserved. |  |
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Warrant is a right but not an obligation to buy or sell a certain underlying assets (stock, index, currency, or commodity), at a pre-determined Price (called the Strike price or Exercise price), on or before a pre-determined Expiry Date.
There are two different types of warrants commonly called company warrants and covered warrants:
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| A company warrant (equity warrant) |
| is a funding exercise for the corporation that issues call warrants over its own stocks. On exercising, the company will issue new shares and deliver them to the exercising warrantholders against payment of the exercise price.
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| A covered warrant |
| is usually issued by an investment bank. The bank does not issue a warrant as a funding exercise but in order to provide investors with an efficient tool to manage their investment portfolio. The covered warrant is a listed security, traded on an exchange and constitutes a contract between the issuer and buyers of the warrant. The obligations of the issuer are materialised by the listing documents that detail all terms and conditions of the issue.
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| Warrants come in two different forms: |
| A call warrant |
| provides the warrantholder with a right, but not an obligation, to buy the underlying asset at a pre-determined price (strike price), within a certain time period.
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| A put warrant |
| provides the warrantholder with a right, but not an obligation, to sell the underlying asset at a pre-determined price (strike price), within a certain time period.
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| Warrants are either European or American style: |
| A European style warrant |
| allows the warrantholder to exercise his right only on the expiry date. Most Hong Kong listed warrants are European style.
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| An American style warrant |
| allows the warrantholder to exercise his right at any time between the listing date and expiry date.
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| Here, we will focus on European Style Covered Warrants as they are the pre-dominant type of warrants traded in Hong Kong
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| However, whichever style, European or American, as they are the warrant can be sold at anytime before maturity in the market. In practice, warrantholders very rarely exercise the warrant. Most warrantholders sell the warrant before maturity. pre-dominant type of warrants traded in Hong Kong.
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| Information and services in this
section are offered only to Hong Kong residents. For the full
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| The above hyperlinks may take you to websites published or operated by third parties not affiliated with Hang Seng Bank Limited ("the Bank"). The third party websites accessed through these hyperlinks may not provide you with any regulatory protections. The Bank is not liable for your use of the hyperlinked websites. |
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Information (the "information") which is "Powered By" BNP Paribas Hong Kong Branch, Credit Suisse (Hong Kong) Limited, ET Net Limited, Macquarie Capital Securities Limited, SG Securities (HK) Limited, The Hongkong and Shanghai Banking Corporation Limited and UBS AG London Branch re-transmitted by the Bank in the ordinary course of business to you for general information and reference purpose only. The Bank, its officers, employees and agents did not devise, select, add to, modify or otherwise exercise control over the Information, do not take responsibility for the Information nor do they endorse the accuracy of it.
The prices of securities fluctuate, sometimes dramatically. The price of a security may move up or down,
and may become valueless. It is as likely that losses will be incurred rather than profit made as a result of buying
and selling securities.
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Disclaimer |
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