7. Expiry and settlement - warrants

All warrants listed on Hong Kong Exchange are European style and are cash settled at expiry.

For warrants are out-of-the-money, the product holders will not receive cash settlement amount. For warrants are in-the-money on the expiry date, the product holders are then paid a positive cash settlement amount according to below formula:

Cash settlement Amount for Call warrants = (Settlement Price – Strike Price) / Entitlement ratio
Cash settlement Amount for Put warrants = (Strike Price - Settlement Price) / Entitlement ratio

For warrants issued on a single local stock, the settlement price at expiry is calculated based on the 5-day average closing price of the underlying stock prior to and excluding the expiry day.

For warrants issued on a local index, the settlement price at expiry is based on the final settlement price of the corresponding index futures contract of the same expiry month as warrants.

For more information about the settlement price at expiry for warrants on other underlying assets, please refer to the relevant listing documents.

*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.