Beginners should know! Techniques for trading DW

Beginners should know! Techniques for trading DW

DW (Derivative Warrants) is derivative warrants. traded on the stock board through a stock trading account Like a stock, the price of DW will be tied to the price of the underlying stock. and changes according to the underlying stock price in SET100 and SET50, which investors can see from the DW price table

Types of DWs

- Call DW is the right to buy The price will go up/down in the same direction as the underlying stock. Suitable for uptrend speculation

- Put DW is the right to sell The price will go up/down against the underlying stock. Suitable for downtrend speculation.

Symbol of DW

DW ADVA13CYYMMA

ADVA = ADVANCE

S50 = SET50 Futures

13 = KGI issuer member number = 13

C = C option or P option

YYMM Year to expire YY / Month to expire MM

A = Model of DW (A-Z)

Special characteristics of S50 DW compared to stock DW

S50 DW is not directly referenced from SET50, but based on the SET50 Futures contract on the TFEX board because it is a contract that is actually traded by all groups of investors. Therefore, S50 DW has high liquidity and prices are adjusted all the time, so S50 DW will be able to better reflect actual trading pressure.

dividend effect

There is almost no effect since S50 DW has no dividend adjustment. Because trading will already have a dividend effect. Investors therefore lose their rights.

DW selection principle

1. Gearing and Tick Ratios

Gearing is the rate of change in the price of DW in % form, which is 2 times when the underlying stock changes.

Tick or Sensitivity is the price change rate of DW in the form of Tick, for example, when the underlying stock price changes 1 Tick, DW will have an Effective Gearing 2 Tick, that is, DW changes 2 price channels.

2. Time to Maturity

DW Price - Intrinsic Value = Time Value

DW with high residual maturity It has a high time value but low time decay so it can be held for a long time.

3. Moneyness

Out-of-the-Money is a position that investors like to speculate on. because it has a higher interest rate

4. Implied volatility (IV)

Is a price indicator that DW is too expensive or not Based on the IV value, DW should be chosen with not very high IV and unchanged retroactive IV.

5. Market Maker

DWs should be chosen at Market Makers who have long experience and use reliable computer software to act as market makers. to prevent trading problems

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