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want to know more about warrants

hey guys... thanks for the replies. very informative!

So my warrants reach expire, i will have to pay the exercise price and the warrants will be automatically converted into shares?

So am I right to say that as long as the exercise price is less than the share price at expiry, I make paper profit?

Tks!

 

i would say that warrants are more liquid then options. Normally, when pple say options, i would think company stock options.

 

Hi,

Is warrant as liquid as option ?

 

now i understand....thanks for the highlight

 

Singapore warrant only allowed you to exercise the right via cash settlement if you hold the warrant until  expiration date. Anytime before that, you can sell the warrant in the market, which most of us do. 

 

btw, where is there a need to go back to the issue to redemn or convert? cant we just sell it at sgx?

 

thanks for the answer

 

Johnnytanki,

Trading (buy/sell) in stock exchange is not the same as 'exercise'. Exercise mean you go back to the issue to redeem or convert. Make sense ?

 

"Most warrants in Singapore are European style,not American style. The difference btw them is that European style warrents are can only be "exercise" on the expiry date, whereas American style warrants can be exercise anytime b4 the expiry date.  "



Hi i am also new in warrants, but i thought we can sell the warrant anytime before the expiry?

 

In our market, more than 90% of the issued warrant are we called structured warrants. It is issued by the investment banks, eg. DBS, Macquarie, Deutsche. The diff with this and option is option can be issued (written) by any rich individual.

You can read more abt warrant in this website, http://www.warrants.com.sg/.

 

Why are these called "warrants" and not options like everyone else does?

 

Hi Pantoo,

Here are the answers to your questions. They reflect my understanding of warrants. Hopefully, its correct.

Yes. U'll need to pay 20cents per warrant.

The minimum qty for warrants is the same as most shares, which is in lots of 1000 warrants.

Most warrants in S'pore (I've not come across any others) are on a cash settlement basis, meaning that u cannot exercise the warrants to own the mother share. The warrant issuer will simply pay u the positive difference between the mkt price and the exercise price of the share on the expiry date.

Sell b4 exercising the warrants? I think u are refering to short selling rite? U need to buy back withing the same day or less SGX will automatically force-buy your warrants at 2 ticker prices above the next day opening price.

As mentioned above, most warrents are on cash settlement basis. Therefore u dun need to pay the exercise price.

Most warrants in Singapore are European style,not American style. The difference btw them is that European style warrents are can only be "exercise" on the expiry date, whereas American style warrants can be exercise anytime b4 the expiry date. In most cases, the mkt is quite efficient, u are highly unlikely to spot a warrant which is trading at a discount. 

Another important thing to note is to check the conversion ratio. It is not always 1:1. It can also be 4:1. Meaning that u need 4 warrants to get 1 share.

 

Hi guys,

I'm new to warrants and would like to know more about them... Thus, I've a few questions rgd warrants:

Assuming the warrants is currently trading at 20cents with an Exercise price of $1 and expires at 31 March. The current stock is priced at $1.30.

- If I were to purchase the warrants, do I just pay for the price it is trading? What's the min. qty for warrants? When will I need to pay the exercise price? What if I sell before I exercise the warrants?

- When the warrants expire, is it automatically converted into shares? If that's the case, do I pay the exercise price?

- If I were to purchase the warrants and sell it off immediately, do I get an instant profit of ($1.30 - $1.20) = 10 cents?

Any other comments welcomed. Thanks!