Good Morning JessicaSimpsons, No, a warrant’s liquidity is not calculated in the same way as it is for stocks. You can’t simply look at the recent traded volume. In fact, a SW can have no volume traded at all and still be highly liquid. This is because of the existence of market makers, who provide bid and offer prices, and typically contribute the majority of the liquidity in a warrant.
The liquidity of a warrant is primarily determined by two factors: the liquidity in the underlying stock, and the quality of the market maker. If the underlying stock is highly liquid, the market maker will typically provide larger volumes on the bid and offer of the SW, which will translate into more liquidity for the SW itself. However, it also depends on the quality of market maker. Most market makers use a computer trading system to provide bid and offer prices. The more sophisticated the trading system and the more experienced the market maker, the more liquidity they’re normally able to provide in their warrants. The easiest way to determine which market makers provide greater liquidity is to compare the bid and offer volumes of their warrants. The warrants with the larger bid and offer volumes are typically the most liquid.
If a warrant is "in-the-money" at expiration, the holder will receive a cash payment of an amount equal to the difference between underlying price and exercise price (multiplied by the conversion ratio) within 5 working days after expiry date.
Put warrants allow investors to profit from downward moves in the underlying share or index. Meaning, put warrants can be used as a form of insurance to protect an existing shareholding or portfolio against a falling market. This is called “hedging”.
The owner of a particular share could hedge against market uncertainty by buying a corresponding put warrant. In case where the share price falls, the profit made from the put warrant can then be used to offset the losses from the share. This way, investors can retain share ownership while at the same time protecting themselves against short term falls in price.
More commonly, investors tend to use index warrants to hedge their portfolio. For example, if an investor owns a portfolio of Malaysian equities, they might buy a FBMKLCI put warrant to hedge their position. If the market falls, the gain on the put should offset some of the losses on their equity position. However investors need to be aware that their portfolio may not be correlated to the FBMKLCI index, so the hedge is not likely to be perfect, and in some cases may be ineffective. Say for example if their shares fall by more than the index, the hedge will not fully offset their losses.
Please read carefully. Kangar is an authorized representative of AP landholder only and doesn't have AP. The AP holder license will be lapsed around 2027.
Legasi Lestari is one of 11 companies in Malaysia that holds registered approved permits (AP) to export river sand and other minerals to Brunei, China, Taiwan, South Korea, Vietnam, Hong Kong, India, Japan, and the Maldives.
Means after kanger teams up with legasi lestari, they can export minerals once there is order?
Scrown can you share more info to us? Thanks in advance.
scrown Please read carefully. Kangar is an authorized representative of AP landholder only and doesn't have AP. The AP holder license will be lapsed around 2027. 25/06/2020 10:01 AM
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
UZUMAKI YAKUZA
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Posted by UZUMAKI YAKUZA > 2020-06-24 09:29 | Report Abuse
Good Morning JessicaSimpsons, No, a warrant’s liquidity is not calculated in the same way as it is for stocks. You can’t simply look at the recent traded volume. In fact, a SW can have no volume traded at all and still be highly liquid. This is because of the existence of market makers, who provide bid and offer prices, and typically contribute the majority of the liquidity in a warrant.
The liquidity of a warrant is primarily determined by two factors: the liquidity in the underlying stock, and the quality of the market maker. If the underlying stock is highly liquid, the market maker will typically provide larger volumes on the bid and offer of the SW, which will translate into more liquidity for the SW itself. However, it also depends on the quality of market maker. Most market makers use a computer trading system to provide bid and offer prices. The more sophisticated the trading system and the more experienced the market maker, the more liquidity they’re normally able to provide in their warrants. The easiest way to determine which market makers provide greater liquidity is to compare the bid and offer volumes of their warrants. The warrants with the larger bid and offer volumes are typically the most liquid.
If a warrant is "in-the-money" at expiration, the holder will receive a cash payment of an amount equal to the difference between underlying price and exercise price (multiplied by the conversion ratio) within 5 working days after expiry date.