On the night of May 29, 2007, China's Ministry of Finance announced that it would raise the stamp duty rate on securities transactions to 3 per 1,000.

The news is absolutely devastating for the stock market today. In this case, Sun Haoyang and Wu Yingying decided to clear the stock early the next morning at any cost to avoid risks.

And how to operate after the clearance, Sun Haoyang had some ideas in his heart.

"If you think of something, hurry up and say it, it's all this time, don't sell it." Wu Yingying said eagerly on the other end of the phone.

"It's not that I'm selling it, it's that I'm not sure about it. I also remembered it by accident, but I wasn't very familiar with this thing and had never played with it. ”

"Tell me what you have in mind, maybe I know."

"Do you understand the warrants?"

"Warrants?" Wu Yingying was stunned for a moment, and began to think about the nature of the warrant.

Warrants are not a new thing, in the 90s, there was a brief appearance in the Chinese securities market, warrants and futures bonds have a duration, so when these warrants expire and are delisted, no one pays attention to this thing anymore.

Therefore, most of the new investors who enter the market after that do not know what a warrant is.

Warrants have really entered the field of vision of the majority of stockholders, mainly from the beginning of this round of bull market in 07. In the period that followed, this thing really caught fire.

In 2005, China's stock market began to carry out the reform of equity division, and warrants are a by-product of the reform of equity division.

When formulating a share reform plan, many non-tradable shareholders of enterprises have a model in addition to the common means of giving shares and dividends, that is, giving warrants.

So after talking for a long time, what exactly is a warrant?

The so-called warrant is actually a certificate of the right to buy or sell shares at an agreed time in the future.

There are two types of warrants, one is called call warrants, which have the right to buy shares at the agreed price; One is called a put warrant, which has the right to sell the stock at an agreed price.

In other words, if you have a call warrant for 100 shares of stock A, and the agreed exercise price is 10 yuan, then after the agreed date, no matter how much the price of stock A rises, even if it is 100 yuan or 200 yuan. You can buy 100 shares of A shares at a price of $10 per share.

Conversely, if you have a put warrant for 100 shares of stock A, and the agreed exercise price is $10, then after the agreed date, no matter how much the price of stock A falls, even if there is only one dollar or even one penny left. You can sell 100 shares of A shares for $10 per share.

On the other hand, the greater value of a warrant is that it is a right rather than an obligation.

In other words, if stock A unfortunately falls below $10 in the end, the holder of the call warrant can choose to give up the exercise.

To put it simply, it is a derivative instrument in which the stock price rises and the person holding the call warrant can get the full return, and the stock price falls without taking any risk.

Of course, having such a unique right is naturally not completely costless, and the price is the price of the warrant. That is, the cost you have to pay to get that right.

For example, the current price of the underlying stock of a stock is 10 yuan, and the exercise price of the call warrant is 8 yuan, then theoretically the value of this warrant is 10 yuan - 8 yuan = 2 yuan.

But in fact, the price of the warrant is generally higher than this price, which is called premium, also known as time value. Of course, as the exercise period approaches, the actual price of the warrant will move closer and closer to the actual value.

In addition, warrants had several characteristics that were not available in the Chinese stock market at the time: leverage, a wide range of price limits, no buy-sell T+1 rules, and the ability to go short.

These characteristics are not yet regulated in China's stock market, which is simply synonymous with speculation.

In the six months before that, almost all call warrants were speculated due to the bullish trend of China's stock market.

Even though almost all call warrants have a huge premium, they are still very popular in the market due to their leverage and the ability to buy and sell at any time.

In fact, a long time ago, Sun Haoyang began to pay attention to put warrants, an emerging security variety.

He was concerned not only because warrants were leveraged and could be more profitable than stocks in a bull market, but also because put warrants were the only security that could be used to short in China's securities market at the time.

Throughout his investment studies, Sun Haoyang has always had a great interest in emerging securities varieties.

Because Sun Haoyang summed up a law from historical data, whenever a new thing appears in China's securities market, it will inevitably experience a speculation, and there will definitely be huge trading opportunities in it.

The warrant varieties were the product of the share reform, and the market was very hot at that time.

Out of risk considerations, Sun Haoyang did not choose to buy this kind of securities with extremely high risk and yield. Because from the bones, Sun Haoyang's investment personality is still relatively conservative.

As an investment variety with bearish stock prices, put warrants are almost completely ignored in the market where the stock market is rising, and the price is also very cheap, only 1 or 2 yuan per share.

But Sun Haoyang has been silently paying attention to this kind of securities that has been forgotten by almost everyone.

The reason is very simple, in fact, from the perspective of value investment, it is easy to judge that the current crazy stock market will not rise forever, sooner or later the bull market will end, and the market will eventually collapse one day, which is the inevitable law in the operation of China's stock market.

Once the stock market turns from bull to bear, Sun Haoyang's millions of funds must find a new investment channel.

At that time, there were no stock index futures in China's securities market, and there was no margin trading.

And in the face of rising inflation in China's financial markets, it's definitely not a good idea to leave your money empty.

So, long ago, Sun Haoyang turned his attention to put warrants, which were the only short-selling tool in China's securities market at the time.

Sun Haoyang had thought in his mind before this, as the only short-selling tool in China's securities market, once the stock market fell off a cliff, put warrants were not only the only hedging tool, but also had a very high probability of being speculated.

Now that China's Ministry of Finance has adjusted the stamp duty rate in the middle of the night, it has unexpectedly adjusted the stamp duty rate, and China's stock market will definitely face a sharp decline in the next period.

In this case, Sun Haoyang suddenly realized: there is an opportunity in front of him, a big opportunity!

"After the market opens early tomorrow morning, no matter what price the stock opens, we will immediately liquidate all positions, and after the clearance, we can put our money into put warrants.

Put warrants have almost never been hyped since they were listed, and the price has been hovering at a low level, and according to my analysis, this major bearish in the stock market is likely to trigger the speculation of short varieties such as put warrants. ”

"That's right!" Wu Yingying slapped his thigh on the other end of the phone: "Why didn't I think of it!" Sun Haoyang, you are such a genius! As soon as the stock market plummets tomorrow, there is at least a 90% probability that the put warrant will rise sharply, if not 100%.

Good! Liquidate your position early tomorrow morning and then buy put warrants......"

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