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How is the theoretical value of a wheel calculated?
1、 The Value of Wolun
In theory, idle value=intrinsic value+time value.
1. Intrinsic value: refers to the benefits that can be obtained when exercising rights.
The intrinsic value of a stock is the difference between the price of the relevant asset and the exercise price of the stock. In terms of subscribing to the shares:
1) If the price of the relevant asset is higher than the exercise price, it is called an "in price idle";
2) If the price of the relevant asset is lower than the exercise price, it is called an "out of price idle", which has no intrinsic value.
2. Time value: Time value refers to the value of the remaining time before the expiration of the lease.
As the expiration date approaches, the time value of the vessel will gradually decrease. When the idle period expires, its time value will decrease to zero. This is because there is a greater chance of buying and selling within the price range for vessels with longer remaining time, resulting in higher value.
1) For low-priced vessels, they only have time value,
2) For in price warrants, there are both intrinsic value and time value, and the time value of in price warrants is the difference between the market price and intrinsic value of the warrant.
1. Intrinsic value: refers to the benefits that can be obtained when exercising rights.
The intrinsic value of a stock is the difference between the price of the relevant asset and the exercise price of the stock. In terms of subscribing to the shares:
1) If the price of the relevant asset is higher than the exercise price, it is called an "in price idle";
2) If the price of the relevant asset is lower than the exercise price, it is called an "out of price idle", which has no intrinsic value.
2. Time value: Time value refers to the value of the remaining time before the expiration of the lease.
As the expiration date approaches, the time value of the vessel will gradually decrease. When the idle period expires, its time value will decrease to zero. This is because there is a greater chance of buying and selling within the price range for vessels with longer remaining time, resulting in higher value.
1) For low-priced vessels, they only have time value,
2) For in price warrants, there are both intrinsic value and time value, and the time value of in price warrants is the difference between the market price and intrinsic value of the warrant.
2、 Example
1. Price out of the box wheel
As shown in the figure,
Wheel price: 0.81 yuan
Conversion ratio: 10
Exercise price: 389.08 yuan
Tencent's stock price: 345.4 yuan
Due to the exercise price of the stock being higher than the regular stock price, this stock is an out of price stock with only time value.
Wheel value (time value): 0.81 (wheel price) x 10 (stock exchange ratio)=8.1 yuan
Wheel price: 0.81 yuan
Conversion ratio: 10
Exercise price: 389.08 yuan
Tencent's stock price: 345.4 yuan
Due to the exercise price of the stock being higher than the regular stock price, this stock is an out of price stock with only time value.
Wheel value (time value): 0.81 (wheel price) x 10 (stock exchange ratio)=8.1 yuan
2. Price based idle wheel
As shown in the figure,
Wheel price: 0.57 yuan
Conversion ratio: 100
Exercise price: 294.08 yuan
Tencent's regular stock price: 345.4 yuan
Due to the exercise price of the stock being lower than the stock price, this stock is an in price stock with intrinsic value and time value.
Wowan value: 0.57 (Wowan price) x 100 (stock exchange ratio)=57 yuan
Intrinsic value: 345.4 (Tencent stock price) -294.08 (strike price)=50.6 yuan.
Time value: 57-50.6=6.4 yuan.
The following can provide a more intuitive understanding of the properties of two types of wheels through charts:
Wheel price: 0.57 yuan
Conversion ratio: 100
Exercise price: 294.08 yuan
Tencent's regular stock price: 345.4 yuan
Due to the exercise price of the stock being lower than the stock price, this stock is an in price stock with intrinsic value and time value.
Wowan value: 0.57 (Wowan price) x 100 (stock exchange ratio)=57 yuan
Intrinsic value: 345.4 (Tencent stock price) -294.08 (strike price)=50.6 yuan.
Time value: 57-50.6=6.4 yuan.
The following can provide a more intuitive understanding of the properties of two types of wheels through charts:
Is a low premium rate slot necessarily better than a high premium rate slot?
The reason for the lower premium of the revolving fund may be due to its approaching maturity, dividend payout on the underlying stock, and being within the price range, which does not necessarily mean that its terms are better. A low premium idle can only be understood as having a lower draw point for this idle, but the actual leverage may also be lower, and the risk and return are proportional; The actual leverage of high premium warrants may be higher.
Only when the terms are exactly the same, can we compare their premium rates.
Only when the terms are exactly the same, can we compare their premium rates.
What is the difference between "R-class" and "N-class" bull and bear contracts?
The difference between these two types of bull and bear contracts lies in the setting of the buyback price.
The "N-class" bull/bear contract refers to a contract whose redemption price is equal to its strike price. If you hold such bull/bear contracts, you will not receive any cash payments after triggering a mandatory recall.
The "R-class" bull/bear contract refers to a contract whose redemption price is different from its strike price. If you hold such bull/bear contracts, you can recover a small amount of cash (referred to as "residual value") after triggering a mandatory recovery. But in the worst case, you will not receive any cash payment.
All bull and bear contracts in the Hong Kong market are classified as "R class".
The "N-class" bull/bear contract refers to a contract whose redemption price is equal to its strike price. If you hold such bull/bear contracts, you will not receive any cash payments after triggering a mandatory recall.
The "R-class" bull/bear contract refers to a contract whose redemption price is different from its strike price. If you hold such bull/bear contracts, you can recover a small amount of cash (referred to as "residual value") after triggering a mandatory recovery. But in the worst case, you will not receive any cash payment.
All bull and bear contracts in the Hong Kong market are classified as "R class".
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