Guide for Beginners

The price of the underlying assets is not the only factor that affects the warrant price...

  • Many factors affect the warrant price, with the three key ones being the price of the underlying assets, changes in implied volatility, and the time decay.

    In addition, changes in the interest rate, dividend distributions, the outstanding quantity, bid-ask spread, and the market demand-supply relationship of the products, will also affect the warrant price.

  • Different factors affect the price movement of call warrants and put warrants differently, summarized as follows:

    Price of call warrants Price of put warrants
    When the price of underlying assets increases Theoretical price rises Theoretical price drops
    When the implied volatility increases Theoretical price rises Theoretical price rises
    When it gets closer to the expiry date Theoretical price drops Theoretical price drops
    When the interest rate increases Theoretical price rises Theoretical price drops
    When the dividend distribution is more than expected Theoretical price drops Theoretical price rises
Consolidate your memory immediately!
If the price of the underlying assets and implied volatility remain unchanged, one week later, the theoretical price of the warrant will
Move quickly? Move slowly? Do warrant prices also move quickly or slowly?
Please refer to
"Movement: Factors that Affect the Warrant Price (II)".
Factors that Affect the Warrant Price (II)
Correct!
Even if the price of the underlying assets and implied volatility remain unchanged, the warrant will experience time decay during the period, causing a decline in the warrant price.
Wrong!
Even if the price of the underlying assets and implied volatility remain unchanged, the warrant will experience time decay during the period, causing a decline in the warrant price.