Classification of covered warrants: In terms of the rights of the holder, covered warrants are divided into call warrants and put warrants.
Call warrants: Giving the holder the right, but not the responsibility, to purchase a certain number of underlying stocks at the exercise price within a specified period of time. If a covered investor is optimistic about the future trend of the underlying stock, it will buy the call warrants of the underlying stocks.
Put warrants: Giving the holder the right, but not the responsibility, to sell a certain number of underlying stocks at the exercise price within a specified period. If a covered investor is bearish on the underlying stock's market outlook, he will buy the put warrants.
According to the time of exercising, the covered warrants can be divided into American warrants and European warrants.
An American warrant can be exercised at any time on or before the expiry date, while European warrants can only be exercised on the expiry date.
In fact, European warrants are mainly popular in the Hong Kong market.
How to obtain information about a covered warrant
The relevant information represented by the abbreviation of the covered warrants are listed below：
We often see the abbreviation of a covered warrant in newspapers and or financial websites, from which investors can see some information about the covered warrant.
Let's take BPTENCT@EC2104C for example.
TENCT: refers to the underlying stock.
BP: refers to the issuer is BNP Peregrine.
2104: refers to the exercise time of the warrant and this warrant will be exercised in April 2011
@: represents that the warrant is settled in cash, that is, if the investor does not sell the warrant before the expiry date, the Issuer will pay the price difference to the investor in cash. If @ is replaced by *, it represents the spot settlement of the underlying stocks; If it is $, it means that it can be settled in cash or spot. As a matter of fact, it is now popular to settle accounts in cash, and the abbreviation of most stock warrants contains @.
EC: E represents that the warrant is EUROPEAN covered warrant, which is the abbreviation of "EUROPEAN"; If it is an American stock warrant, it is represented by "A". C means that the warrant is a call warrant. It is short for "CALL" and the. In the case of a put warrant, it is represented by "P".
C: refers to BNP Peregrine may issue other Tencent warrants in the same time, but the exercise conditions are different (such as strike price). So it is divided into ABCD.
