European
style warrant can only be exercised (ie. you take the bet off the table
against issuer)upon expiry date, automatically, you don't have to email
the issuer or anything.
However, you can't choose to exercise it before the expiry date.
After
the expiry date, the warrant will be automatically exercised and the
issuer will mail you a cheque if your settlement is greater than zero,
ie the warrant expired 'in the money'.
On the expiry date, the settlement you will receive for a call warrant is calculated based on this formula:
Settlement (in RM)
= [(Mother share price)- (Exercise price)] x (1/Conversion ratio) x number of warrant
So
let say in an example, the mother share price is RM13.62 and the
exercise price of call warrant is RM10.00, and conversion ratio is 10 to
1, and you are holding 1000 call warrant
then applying the above formula will be
Settlement
= [(Mother share price)- (Exercise price)] x (1/Conversion ratio) x number of warrant
= [(13.62) - (10.00)] x (1/10) x 1000
= 3.62/10 x 1000
= 0.362 x 1000
= RM362.00
If
you apply the formula above and found that the settlement is a negative
in numbers, you dont have to pay the issuer anything, but it also means
your call warrant expired worthless, ie you lost all the money invested
in the particular call warrant.
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