3.Factors that affect the price of warrants and CBBCs:

Call Warrants Put Warrants Bull Contracts Bear Contracts
Underlying asset's current price (intrinsic value)
Maturity (time value)
Insignificant effect Insignificant effect
Implied volatility
Insignificant effect Insignificant effect
Dividends
Interest rate
  • Besides the above fundamental factors that determine the theoretical prices of warrants or CBBCs, the actual prices of warrants or CBBCs are also affected by the market's demand and supply. If a warrant or CBBC has a high market outstanding quantity and relatively low supply from the issuer, the product's price is more vulnerable to the influence of market supply and demand. When there is selling pressure on a product, its price may be brought down by the prevailing market forces. As a result, its price may not follow the price of the underlying asset very closely.
  • The actual price of warrants and CBBCs may be affected by prevailing market conditions such as hedging costs and the liquidity, spread and volatility of the relevant underlying assets.

*Turnover of a warrant or CBBC has no direct relationship with the product's price. Investors should not use turnover as the only indicator when choosing a warrant or CBBC.