| Contract Type | Execution Timing | Has Strike/Exercise Price? | Has Contract Price? | What It Means |
|---|---|---|---|---|
| European Option | Only on expiry date | Yes | No | Can be exercised only at expiry |
| American Option | Anytime before and including expiry date | Yes | No | Can be exercised at any time |
| Warrants (HK) | Usually only on expiry date (European style) | Yes | No | Most are European style |
| Futures | Settled/exercised on expiry date | No | Yes | Obliged to settle on expiry date |
| Chinese | English Meaning |
|---|---|
| 認股權證 | Derivative warrant |
| 認購權證 | Call warrant |
| 認沽權證 | Put warrant |
for put warrant
| Asset Price Movement | Impact on Put Warrant Holder |
|---|---|
| Price falls below strike price | Profit ("in the money") |
| Price above strike price at expiry | Warrant expires worthless (loss) |
| Price rises before expiry | Value drops, potential to lose part/all of premium paid |
Buying a put warrant is like betting the asset price will fall. If it rises instead, you lose (at worst, all the premium paid for the warrant).
for warrant
| Term | Meaning |
|---|---|
| Board Lot | Minimum quantity of warrants per trade (e.g. 500 warrants) |
| Conversion Ratio | Number of underlying shares each warrant represents |
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