Warrant introduction

Warrant type

1.  Call warrant

American call warrants entitle holders to buy the underlying assets at a specific price, quantity, and at a future time. Huobi warrants do not perform physical delivery, and call warrant holders may make a profit if the underlying assets appreciate. Moreover, holders can exercise their warrants in advance to lock in profits.

2. Put warrant

American put warrants entitle holders to sell the underlying assets at a specific price, quantity, and at a future time. Huobi warrants do not perform physical delivery, and put warrant holders may make a profit if the underlying assets depreciate. Moreover, holders can exercise their warrants in advance to lock in profits.

Users can only BUY warrants -with leverage, low risk, and high yield

Users can only buy Huobi warrants. Huobi warrants feature leverage, low risk, and high yield. Warrant sellers bear higher risks, and users cannot sell (write) warrants for now.

1.  Inherent leverage

American warrants give holders a right to profit from the price movement of underlying assets at a limited cost and at a future time.

Example: When the BTC price is $53679.85 and you buy an American warrant (1-day term) for 1 BTC, the required warrant premium is $1784.93. In this case, the leverage is 30 times.

The above example is for explanation only and cannot be used as an investment reference. The warrant premium is affected by real-time prices of underlying assets.

2.  Controllable risk

When the market fluctuates sharply, spot leverage, perpetual contracts, and delivery contracts all have the risk of liquidation while warrant buyers do not. In fact, warrant buyers are only subject to limited losses as their maximum loss is only the warrant premium.

 

Yield curve for call warrant buyers

As shown in the figure, if the price of the underlying asset falls, the maximum loss of the call warrant buyer is only the premium.

 

Yield curve for put warrant buyers

 As shown in the figure, if the price of the underlying asset rises, the maximum loss of the put warrant buyer is only the premium.

3.   High yield

In theory, call warrant buyers may have unlimited returns. Take call warrants as an example. If the underlying asset price rises sharply, the call warrant can reap the same return. Similarly, if a user purchases a put warrant, a sharp drop in the underlying asset price will bring the user the same magnitude of return.

Simple purchasing process-no need to set the exercise price or expiration date

For traditional exchange-traded warrants, the trading process is complicated, the same underlying asset has different expiration dates, and there are warrant contracts with different exercise prices on the same expiration date. For ordinary users, the threshold for exchange-traded warrants is too high and trading is too complicated. Huobi Warrant (App) simplifies the warrant purchase process and lowers the threshold for users.

1. No need to set an exercise price

Huobi Warrant (App) use the real-time price of underlying asset as the exercise price, and there is no need for users to set the exercise price. In other words, users buy at-the-money warrants (underlying asset price = exercise price) in Huobi Warrant (App).

Take the call warrant as an example:

The user purchases a BTC call warrant contract in Huobi Warrant (App), which is designed to purchase BTCs of the contract value at the BTC index price. If the BTC price rises, users can reap the benefits accordingly.

Take the put warrant as an example:

The user purchases a BTC put warrant contract in Huobi Warrant (App), which is designed to sell BTCs of the contract value at the BTC index price. If the BTC price drops, users can reap the benefits accordingly.

2 . Rich choices of warrant terms

Users can directly select the warrant term below the underlying asset price, such as 5 minutes, 10 minutes, 1 day, 3 days, 1 week, etc. Huobi Warrant (App) simplifies the choice of warrant terms.

Exercising

1. Exercise upon expiration

When a Huobi warrant expires, it is exercised and settled at the real-time price of the underlying asset.

2. Exercise before expiration

Huobi warrants are American ones and users can exercise their warrants in advance to lock in profits.

Huobi warrants are settled in USDT and the underlying asset is not delivered.

For specific payment rules, please refer to >>>.

Application scenarios of Huobi warrants

1. Hedging

Users can use Huobi warrants to hedge risks. For example, if BTC holders are worried about price drops, they can use put warrants to reduce losses. Specifically, miners/BTC borrowers can use warrants to hedge BTC's downward risks and Defi users can use warrants to hedge impermanent losses.

2. Speculative trading

Speculative trading is possible with Huobi warrants. For example, a user can buy call warrants to bet on a BTC upward movement.

3. Short-term strategy

Unlike traditional warrants, Huobi warrants provide relatively short terms ranging from 5 minutes to 1 year. Users can buy such warrants to implement different short-term trading strategies.

 

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Huobi Global reserves the right in its sole discretion to amend or change or cancel this announcement at any time and for any reasons without prior notice.