Inline Warrants
Inline Warrants are a type of structured product that entitle the investors to receive a pre-determined fixed payment at expiry, depending on whether the underlying1 falls at or within (i.e. In-The-Range) or outside (i.e. Out-of-The- Range) the Upper and Lower Strikes at expiry.
Features
- Upper and Lower Strikes, with no knockout barrier
- In-The-Range (ITR): fixed payment of HK$1
- Out-of-The-Range (OTR): fixed payment of HK$0.25
- Maximum upside and downside is known at the time of investment
- Can be bought and sold before expiry or held until maturity
Payment at Expiry
Opportunities
- Range trading vs directional trading (DWs or CBBCs)
- Possibility to make profits in a sideway or flat market
- Investors may choose from different strike prices to express their views on the underlying stock price or index level
Risks
- Profit potential is capped by the pre-determined payment
- Maximum loss is limited to initial investment
- Trading above HK$1 may not reflect the true value of the inline warrant; any inline warrant trades executed at the price above HK$1 will not be recognized and will be cancelled by HKEX