Hi dear valued readers: After introducing some of the major keywords which are basically used in
Share Warrants recently, it's very useful for the beginners to understand the meaning of them, in which to help to evaluate the actual value of those warrants, for example, still In-The-Money or Out-Of-Money, is so critical issue in a future investment !! (1) Historical
Volatility : is a figure derived from the price action of the
underlying security using statistical calculation.(2) Implied Volatility : is a figure derived from warrants pricing formula when we input the current
Warrant price and work backwards to derive the (implied) volatility figure. It represents current market expectations of the future volatility of the underlying security.(3) Delta : represents the magnitude of the warrants price movement in theory in response to movement in underlying share price. Delta = Change In Warrant Price / Change In Underlying Share Price.(4) Effective Gearing : is a more accurate measure of a warrant's gearing. It adjusts for the Delta of the warrant.(5) Call Warrant : Holders of the call warrants have the right, but not obligation, to buy the underlying share (or security) from the issuer for a particular price at a future date based on terms of issue or to receive cash settlement based on the underlying share price and exercise price of the call warrant. The common symbols used for warrants in Bursa Malaysia are -w, -wa, -wb, -wc and etc. For call warrants, there are -ca, -cb, -cc, -cd and etc. Be noted that it will be a slight difference for foreign call warrants such as Google Call Warrant (Google-c1), Apple Call Warrant (Apple-c1), Sinopec-c1, -c2, -c3 and etc.It will be a conversion rate applied for all the foreign call warrants.
More summaries about the How To Invest & Understand Share Warrants - Part 2