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What is DW and what investors should know before investing in DW

2022-10-07
2024

Readers may have heard of DW shares, right? But what is DW? How is it different from investing in stocks? And what should we know before investing in DW? Today I have broken down the key points for you readers. To help readers invest with confidence in all market conditions.

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What is DW?

DW is a warrant. So what is a warrant?

There are two types of warrants, equity warrants and derivative warrants.

Equity warrants are issued by listed companies. They give the holder the right to subscribe to the issuer's equity securities. Equity warrants are usually issued with new shares in an IPO or distributed with the shares acquired for dividends.
Derivative Warrants It is classified as a derivative or structured product. Derivative warrants have a maturity of 6 months to 5 years. The underlying assets of derivative warrants are common stocks, market indices, currencies and a basket of stocks. Derivative Warrants Issued by Third Parties It is typically an investment bank. independent of the issuer of underlying securities
Type of DW(Call DW + Put DW)
DW shares can be divided into 2 types according to the exercise of rights:

Call DW is a DW whose price changes in the same direction as the price of the underlying asset. And if the underlying asset price goes up, Call DW will also go up. This makes this instrument profitable in an upward price direction. For example, a sports car price of 50 million baht compares the DW of a sports car to a sports car model. If in the sports car market, the price increases to 55 million baht, the sports car model or DW, the price will go up accordingly. which we can profit from buying sports car models

Put DW to DW where the price changes in contrast to the underlying asset price. If the underlying asset price goes up, the Put DW will go down. But if the underlying asset price goes down, Put DW will go up in the opposite direction. This allows this instrument to be profitable in the downward direction of the price.

How to calculate DW price

Another important aspect of DW trading is the valuation of the instrument as the price of the instrument. At that time, is it suitable for the current price? What factors affect the price? which we cannot avoid is How to calculate the DW price

The time value will be more or less depending on the remaining time. The time value will be high. On the other hand, the closer the DW is to expiration, the lower the DW's price is because its time value is reduced to nothing.

How do you see the DW code?

Example: ADVANC24C2212A will mean that

Where does the value of DW come from?

The value of DW shares is made up of two variables:

The real value of a DW is the difference between the share price and the exercise price of that DW. The DW can also reflect the economic conditions and the condition of the parent stock index.

A DW is a product that changes in value over time (Time Decay), also known as the time depreciation that determines the price of each DW.

DW Opportunities and Risks

Investors are advised to understand and consider the risks below before trading in Derivative Warrants. and contact your dealer or financial advisor for details.

Risk of Warrant Issuers The holder of derivative warrants is the unsecured creditor of the issuer. and they do not have exclusive rights to any property that the issuer may hold.

Although derivative warrants are often priced lower than the underlying asset's price. However, derivative warrants may change in value more than the underlying asset. Although the return on derivatives warrants may be higher than the underlying asset. But it should be noted that in the worst case The value of derivative warrants may be reduced to zero and the holder may lose all of their investment.

The age limit is not the same as the stock. Derivatives have an expiration date and a limited life. Derivatives are worthless at expiration.

as long as other factors still unchanged The value of derivative warrants decreases over time. Therefore, derivative warrants should not be viewed as a purchased commodity and considered a long-term investment.

Market mechanisms In addition to the fundamental factors that determine the theoretical price of derivatives warrants, Derivatives prices are also affected by the demand and supply of derivatives warrants. This is especially the case where the issuance of derivative warrants is almost sold out and when there is a growing problem of existing derivative warrants.

Factors Affecting DW Price

When investors start to understand how DW works, another thing investors should know before buying DW is the factors that affect the price of DW. Currently, there are 6 types of factors that affect DW price:

Suitable investors for DW investments

investorInvestors who want to use low investment but can make high profits.


Investors can predict the market direction whether it is in an uptrend or a downtrend because DW can manipulate all market conditions with Call DW and Put DW.


Commissions are cheaper than stock markets in general.


summarize

Readers will probably see the benefits of DW shares more or less, whether it's a small investment. Able to use ratios to help trade limited loss But there are also things that DW investors shouldn't do, such as buying DW shares at a lower price. Don't buy on average and don't hold DW until maturity. Therefore, investors should always be conscious in trading. and play according to the plan And get a deep knowledge of what to trade and use professional trading tools and trade on the trusted web like CMTrade.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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