What is 'Implied Volatility (IV)'? How does it affect warrant prices?

Implied volatility represents the market's expectation of the future degree of fluctuation of the underlying asset. With other terms (such as strike price and expiry date) being equal, the lower the implied volatility, the cheaper the warrant's price. Therefore, finding products whose implied volatility is relatively low versus the broad market is an important technique when investing in warrants.

How do I interpret the chart in the upper table (the yellow horizontal line and the red inverted triangle)?

The 'yellow horizontal line' in the table represents the distribution of the implied volatility pricing range of the warrants currently actively traded in the market, while the 'red inverted triangle' marks the implied volatility level of Huatai's selected warrant on that underlying asset. If the red inverted triangle sits to the left of, or towards the left of, the yellow line, it means Huatai's selected product is more competitively priced (cheaper) relative to the market.

What is the purpose of the 'Issuer Average Implied Volatility' scatter chart at the bottom of the page?

Investors can select a specific underlying asset (for example, Tencent Holdings) in this section. The scatter chart displays the 'average implied volatility' point of each issuer's warrants on that asset (denoted by codes, e.g. HU for Huatai). Combined with the 'market average level' dashed line in the chart, investors can see at a glance which issuer's overall pricing is below the market average and offers a more affordable choice.

Huatai Warrants vs Market IV

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Top 20 Active Warrant Underlyings

Underlying		Turnover	Top Picks

Implied Volatility %

Top 10 Gainer Underlyings Implied Volatility

Underlying		Change(%)	Top Picks

Implied Volatility %

Top 10 Loser Underlyings Implied Volatility

Underlying		Change(%)	Top Picks

Implied Volatility %

Huatai Top Picks IV

Active Warrants IV Range

Underlying:

Issuer Avg Implied Volatility

Huatai Historical Avg Implied Volatility

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The implied volatility represents the market's expectation of the future volatility of the underlying. All other terms being same, the lower the implied volatility, the cheaper the warrant. Warrants selected from the market is based on products with a delta between 8% and 70%, days to maturity greater than 1 month, and outstanding below 66%. The terms of relevant warrants may differ from those of products recommended by Huatai.

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