The higher the premium rate, if investors want to protect their capital, the higher the change range of the underlying asset price in the investor's favorable direction, and the higher the risk. Simply put, investors can regard the premium rate as one of the investment costs.
Calculation formula of insurance premium rate:
Premium rate of call warrants = (call warrant price+exercise price × exercise ratio-underlying asset price × exercise ratio)/(underlying asset price × exercise ratio) × 100%
Put warrant premium rate = (put warrant price-exercise price × exercise ratio+underlying asset price × exercise ratio)/(underlying asset price × exercise ratio) × 100%
Extended data
explain
The exercise price of a warrant is 50 yuan, the current warrant price is 1 yuan, the current share price is 45 yuan, and the exercise ratio is 1: 1. In the formula, the premium rate of the subscription card is 1.3%, that is, if the investor holds the stock until it is sold at maturity, the stock must rise by at least 1.3% before the investor can protect the capital.
Warrant performance
Premium rate is an important index in warrant value analysis, which reflects the deviation between warrant price and exercise price and stock price. As a right to buy and sell stocks, warrants have time value and theoretical value. Therefore, it can be used as a substitute for ordinary stocks. According to law of one price, the warrant price is closely related to the stock price. This paper tries to analyze the value of warrants with premium rate and gets many interesting conclusions.
References:
Baidu encyclopedia-insurance rate