Learning how to read warrants helps investors determine the “identity” of a warrant and can track many other factors contained in a warrant. Join PHS to learn about how to read the warrant code as well as the basic information of the warrant in the article below.

WHAT IS THE WARRANT CODE?

A warrant code is a code with an 8-character structure, determined according to the regulations on the code listed on the exchange of the Ho Chi Minh City Stock Exchange. This is the name to call a certain type of warrant currently on the market. Just like an issuer's stock has a basic 3-character code, warrants are also issued with such an identification code.

The warrant code is not generated by a random combination of characters, each component in the code has its own meaning that represents part of the characteristics of the warrant.

HOW TO READ THE WARRANT CODE?

• A certificate code consists of 8 characters according to the structure CUUUYYRR, in which:
  C stands for Call/Put order in stock trading. In Vietnam, currently only warrants are available with the underlying asset being stocks.
• UUU is an acronym for Underlying: is the underlying stock code of the issuer.
• YY stands for Year: is the year the warrant is issued.
• RR stands for Roand: Issue of warrants on the same underlying account.

Example: Analysis of warrant code CHPG2201:
Warrants to buy shares of Hoa Phat Group (HPG) issued for the first time in 2022.

NOTES WHEN LEARNING ABOUT WARRANTY AND CODE

Each warrant will have a different code, there is no duplication in the market in order to avoid confusion of "identity". The following are important notes that investors should grasp when learning about warrants and warrant codes:

• Leveraged warrants: Financial leverage makes the return for investors to be greatly increased if the market moves as they expect. The high leverage of warrants means that the holder has a higher investment risk than an investment of the same value in the underlying asset. However, if the market reality is not as expected, investors are likely to lose their entire invested capital (the amount spent to buy CW).
• Underlying stock risk: Movements in the underlying security can have a major impact on the CW's price. If the underlying securities are suspended from trading or delisted, the CW will also be suspended from trading or delisted.
• Timing: Because CWs have a time to maturity, the price of CWs can drop as the expiration date approaches, and this discount can be quite large. Therefore, before deciding to invest in warrants, investors need to carefully study the price movement trend of the underlying securities during the validity period of the CW.
• Limited Life: Warrants always have a finite life. Therefore, at the time of maturity, investors will not be able to continue holding CW as a stock investment, but will be paid or lose the original warrant purchase fee. Therefore, investors should not consider CW as a product that can be bought and held for a long time.
• Price volatility: CW prices change frequently, and this change depends on many factors such as the price of the underlying security, the degree of price volatility of the underlying security, the validity period of the CW, interest rates, dividends of underlying securities, market supply and demand…

Read and understand the information you can easily learn. Follow up and together with PHS make a list of your own warrants, investing when you feel a good opportunity is a smart way that investors should not ignore.