Exercise: The warrant holder requires the issuer to perform the obligations stipulated in the warrant in accordance with the agreed time, price and method.

The exercise ratio refers to the number of underlying securities that can be purchased or sold with one warrant. For example, if the exercise ratio of a certain call warrant is 0.1, then 10 warrants can buy 1 stock.

Exercise price - the core of the stock option plan

General stock options refer to a derivative financial instrument, which corresponds to the "underlying assets" (underlying assets, or " "Underlying asset") is a stock, which can be divided into two types: call option and put option. The core is the exercise price of the option. The size of the option exercise price determines the intrinsic value of the option (intrinsic value, which refers to the difference between the option’s exercise price and the market price of the option’s underlying asset). At the same time, the option exercise price is also used by the Black Scholes model to calculate the option price (i.e. option premium). An indispensable variable. General stock options can be listed and traded on options exchanges or stock exchanges and are a trading variety.

However, stock options as an incentive mechanism for listed companies are different from the general stock options mentioned above. This difference is reflected in the following: the stock options in the incentive mechanism of listed companies are single purchase options; the stock options issued by listed companies to internal employees are free; stock options are not transferable. These differences determine that the stock option plan, as a company incentive mechanism, needs to solve the following issues in the design of the option exercise price:

First, how to set the exercise price when granting? The difference in exercise price will determine whether the stock option is out-of-the-money, in-the-money or at-the-money. The difference between the three is When the option is issued, whether the option itself has intrinsic value. An out-of-the-money option means that the exercise price of the option is higher than the market price of the stock when the option is issued, and the intrinsic value of the option is negative. A real-money option means that the exercise price of the option is lower than the market price of the stock when the option is issued, and the option has intrinsic value. An at-the-money option means that the exercise price of the option is equal to the market price of the stock when the option is issued, and the intrinsic value is zero. Different choices will result in a difference in whether there is an income when the option is issued. If stock options are used as a means of motivation, focusing on future corporate performance and stock price increases, the exercise price of the option should be equal to or higher than the current stock market price, and the option therefore becomes an at-the-money option or an out-of-the-money option. If stock options are used as a welfare tool or as a component of management or employee compensation, the option exercise price should be lower than the current stock market price, that is, real-valued options are issued to employees.

Second, can the option exercise price be adjusted? Under what circumstances can adjustments be made? Is it an upward adjustment or a downward adjustment? Because when huge systemic risks occur in the stock market, the skyrocketing or plummeting stock price has deviated from the company's fundamentals, which is beyond the control of the company's internal management employees. In this case, the options that have been issued may cause huge losses. income, or become worthless, which obviously deviates from the original intention of designing the option plan. At this time, the exercise price specified when the option was granted seemed particularly inappropriate and faced pressure for adjustment.

Therefore, the design of the option exercise price is related to the purpose of the stock option plan: is it focused on incentives, or is it mainly welfare? If the focus is on incentives, when options are granted, the exercise price is set higher than the market price. When the stock market fluctuates as a whole, the exercise price is adjusted, or the exercise price is linked to the fluctuations of the entire market (such as the stock index). Through the efforts of management and employees, we create value for shareholders and enable management and employees to share the benefits of increased shareholder value. If you focus on benefits and set the exercise price below or much below the market price when options are granted, management and employees can easily earn an income in the name of the stock option plan no matter how the stock price fluctuates in the future.

In reality, different countries/regions have different regulations on the exercise price of stock option plans of listed companies.

The exercise period specifically refers to the exercise period of the stock warrant.

Specifically, it should refer to the period within which the rights of the warrant can be exercised.

The following is a brief introduction to warrants and exercise.

Warrants can be divided into call warrants and put warrants. Investors who buy call warrants can only make money if the underlying stock price rises in the future, while investors who buy put warrants can only make money if the underlying stock price falls in the future.

In terms of exercise status, warrants are also divided into European and American warrants. American-style warrants allow holders to exercise their rights at any time from the listing date to the expiration date of the stock, while holders of European-style warrants can only exercise their rights on the expiration date. European-style warrants are the most common in Hong Kong. Warrant category.

Whether it is a call warrant or a put warrant, they all contain the following main characteristics: First, the leverage effect. Second, it is timely. Warrants have time value, and the time value decreases as the expiration date of the warrant approaches. Third, holders of warrants and holders of stocks enjoy different rights. The holders of warrants are not shareholders of the listed company, so the holders of warrants do not enjoy the basic rights of shareholders such as voting rights, participation in dividends and other rights. The fourth is the particularity of investment income. For warrants, if investors make correct judgments on the underlying stock price, they will gain greater profits.

To put it simply, the operation of put warrants is exactly the opposite of that of stocks. When you are bullish on stocks, you must sell them. Put warrants. When you are short on a stock, you have to buy a put warrant. However, since warrants are a new thing now, the trend may be a little unusual at first.

Due to the special nature of warrants, the risk is much larger than that of stocks, so it is best for you to participate in a small amount.

Warrants are T 0 trading methods and can be bought and sold multiple times on the same day.

It can also be done online, but you must first go to a securities company to enable online trading and warrant trading.

The exercise price is the price at which the underlying stock (underlying stock) can be bought or sold on the exercise date.

The exercise date is the day when the rights of the warrant can be exercised.

Exercise: refers to the warrant holder requiring the issuer to perform the obligations stipulated in the warrant in accordance with the agreed time, price and method.

The specific tax paid is the exercise tax, which is similar to the transaction tax in stock transactions, but it is a different tax item.