Covered warrants, a new stock market initiative, will soon be applied to the HCM Stock Exchange, it was announced on December 13.
A covered warrant allows holders the right to buy or sell equities at a predetermined price on or prior to a set date.
For example, if an investor sees a profitable future in a company's shares but does not have enough money to buy, they can instead purchase a warrant worth 1-2 percent of the share value.
If their prediction is wrong, the loss is worth only the original 1-2 percent, but if they have invested well then they can enjoy the profits.
Covered warrants are similar to options, offering leverage for investors. The issuers, often brokerages or banks, are independent of the issuers of equities.
The equities, including domestic and foreign stocks, indices, and treasury deposit receipts, will be reviewed quarterly.
Warrants were released in Hong Kong in the 1990s, and have grown strongly in the Asian market since 2003, reaching the current trading value of 900 billion USD per annum.-VNA
A covered warrant allows holders the right to buy or sell equities at a predetermined price on or prior to a set date.
For example, if an investor sees a profitable future in a company's shares but does not have enough money to buy, they can instead purchase a warrant worth 1-2 percent of the share value.
If their prediction is wrong, the loss is worth only the original 1-2 percent, but if they have invested well then they can enjoy the profits.
Covered warrants are similar to options, offering leverage for investors. The issuers, often brokerages or banks, are independent of the issuers of equities.
The equities, including domestic and foreign stocks, indices, and treasury deposit receipts, will be reviewed quarterly.
Warrants were released in Hong Kong in the 1990s, and have grown strongly in the Asian market since 2003, reaching the current trading value of 900 billion USD per annum.-VNA
