What do I do with this lousy warrant

[John26]

Ok, so I bought this FTSE100 5800 March 18th put from my broker

I was curious as to how much each ft100 point below 5800 the warrant will be worth at expiry
I purchased 4,000 at 22pence each

I called Societe General and the chap explained this
Value at expiry = (Strike-FTSE100 future value)/1000
My put is worth £1500 today
If the ftse remains at 5600 (now value), my option at expiry will be worth
(5800-5600)/1000=£800

For my put to be worth more than what I can trade it at today, the FTSE would have to be at 5450

Now, I fail to understand how this type of product can be of any value, I am lucky the markets are melting, but this is rather unusual, I put nearly £1k on the table for this, I did my research but I came up with a divide by 100 figure, got that wrong obviously! lol

So, is there any reason why I should let this expire, or why I should sell it now whilst ITM because as it it, I don't think think I'm priced in to keep this.

What's your thoughts.

Cheers.

 

[apau]

If you think the market is going to rally, then sell it.

I was thinking about the warrant after we last spoke, I think this relies on SocGen to be around (sure others will tell me if I am wrong) for you to get out as if something happens to them you will lose all liquidity.

If you were trading options, this wouldn't be a problem.

 

[John26]

If you think the market is going to rally, then sell it.

I was thinking about the warrant after we last spoke, I think this relies on SocGen to be around (sure others will tell me if I am wrong) for you to get out as if something happens to them you will lose all liquidity.

If you were trading options, this wouldn't be a problem.

Hey, hi,

I don't think the market will rally, IMO markets are heading down, big time! I see 5600 on expiry but even with that, I'm better off selling today, surely this doesn't make sense. What is the point in risking £1k in a put, unless there is a total global meltdown (and then the issuer might not be able to pay me) - Oh damn, this is like playing 6 card omaha - I'd rather daytrade 3uks, less risk, more reward.

Another thing that just occured to me, if I hit 5600, I make 800 sterling but I put in 1k, so i'll be down 200 sterling!!! Is this right or do I get my bet back?

Cheers.

 

[apau]

Hey, hi,

I don't think the market will rally, IMO markets are heading down, big time! I see 5600 on expiry but even with that, I'm better off selling today, surely this doesn't make sense. What is the point in risking £1k in a put, unless there is a total global meltdown (and then the issuer might not be able to pay me) - Oh damn, this is like playing 6 card omaha - I'd rather daytrade 3uks, less risk, more reward.

Cheers.

I assume the reason you are seeing value selling now at a higher rate is because of vol being sky high.

 

[John26]

I assume the reason you are seeing value selling now at a higher rate is because of vol being sky high.

Just added:
Another thing that just occured to me, if I hit 5600, I make 800 sterling but I put in 1k, so i'll be down 200 sterling!!! Is this right or do I get my bet back?

 

[apau]

Just added:
Another thing that just occured to me, if I hit 5600, I make 800 sterling but I put in 1k, so i'll be down 200 sterling!!! Is this right or do I get my bet back?

What is the actual price of the warrant now?

 

[John26]

What is the actual price of the warrant now?

34p
It's FT55
https://sglistedproducts.co.uk/productdetailspage/symbol:FT55/

 

[apau]

Correct me if I am wrong, you are currently up £480?

34p-22p = 12p

12p x 4000 shares = £480

 

[John26]

Correct me if I am wrong, you are currently up £480?

34p-22p = 12p

12p x 4000 shares = £480

Yep, that's about right

 

[apau]

So sell it now for £480 or if it at expires at 5600 you make £2000?

 

[John26]

So sell it now for £480 or if it at expires at 5600 you make £2000?

Sorry, how do you work out 2k if 5600 at expiry :innocent:

 

[oner789]

There are so many reasons why it is called as lousy warrant. Maybe because the products itself is not satisfying or not on demand or it came from a place where principal price is lower. So for me, think first what would you get while doing or having that lousy warrant.