DW

Foreign DWs

Foreign DWs
Foreign underlying DWs offer attractive trading opportunities.

Foreign underlying DWs provide the opportunity to invest in other countries through DW, by allowing the foreign stock or foreign indices to be used as the underlying asset. Investors can gain benefits from the volatility of foreign stock/indices through DW.

Foreign underlying DWs provide the opportunity to invest in other countries through DW, by allowed the foreign stock or foreign indices to be used as the underlying asset. Investors can gain the benefits from the volatility of foreign stock/indices through DW.

Advantages
Group 15113

Possibility of profiting from investments in foreign assets
Group 15114

Low investment, high returns
Group 15115

Investors can trade DWs in Thai baht, using their existing trading account
Easy trading with high liquidity
Foreign underlying DWs are traded in the same manner as Thai stocks, with investors able to trade in Thai baht using their stock trading accounts. DW issuers will appoint a market maker which is responsible for buying and selling DW at a fair price in an effort to keep DW liquidity trading.
Easy trading with high liquidity

Foreign underlying DWs are traded in the same manner as Thai stocks, with investors able to trade in Thai baht using their stock trading accounts. DW issuers will appoint a market maker which is responsible for buying and selling DW at a fair price in an effort to keep DW liquidity trading.

DW is a leveraged product

A DW provides investors with leverage because its price is significantly lower than the underlying price. For example, if a foreign underlying DW is 5 times leveraged, a 1,000-baht investment in a call DW is roughly equivalent to a 5,000-baht investment in the underlying index, with a maximum loss of 1,000 baht.
Differences between local and foreign underlying DWs
FeaturesThai stock DWsThai index DWsForeign stock DWs
Foreign index DWs

Example

PTT

SET50

"ABCD"

"XYZ"

Symbol

PTT99C3012A

S50C3012A

ABCD99C3012A

XYZ99C3012A

Exercise ratio (for stock) or
Index multiplier (for index) 

The ratio of a DW to an underlying stock e.g. 4:1

Value per 1 index point e.g. THB0.01234 per 1 index point

 The ratio of a DW to an underlying stock e.g. 4:1

Value per 1 index point e.g. HKD0.0123 per 1 index point

Exercise price

THB40

25,000 points

HKD40

25,000 points

Settlement price

The closing price of the underlying securities on the last trading day

• The underlying index's closing price or,
• The average of the index's closing prices or,
• The underlying index futures contract's final settlement price

The closing price of the underlying securities on the last trading day

The final settlement price of the underlying index futures contract

 

Ceiling & Floor calculation

First trading day:
DW IPO price ± (100% of the underlying asset's closing price x exercise ratio or index multiplier)
General trading days:
DW previous day’s close price ± (30% of the previous day's closing price x exercise ratio or index multiplier)

Not more than 20 times the DW price (DW previous day's closing price / IPO price), the minimum price is THB0.01

Type

Call or Put

Exercise style

European settlement

Duration

2 months to 2 years

Settlement method

Cash Settlement

Cash settlement calculation

Call DW

  • If the settlement price is higher than the exercise price, the cash settlement is equal to the difference between the two, multiplied by the exercise ratio or index multiplier. If the settlement price is less than the exercise price, the cash settlement is 0 baht
  • Cash settlement = Max [0, (settlement price - exercise price) x exercise ratio or index multiplier]

Put DW

  • If the exercise price is higher than the settlement price, the cash settlement is equal to the difference between the two, multiplied by the exercise ratio or index multiplier
  • If the exercise price is less than the settlement price, the cash settlement is 0 baht
Cash settlement = Max [0, (exercise price - settlement price) x exercise ratio or index multiplier]. For foreign underlying DWs, the "cash settlement" will be calculated in foreign currency using the exercise ratio or index multiplier and adjusted to "Thai baht" using the issuer's specified exchange rate.
Exampleof profit/loss calculationfrom a DW exercise based on the Hang Seng Index (HIS)

HSI index DW

DW symbol
XYZ99C2207A
Exercise price
25,000 points
Last trading date
29 July 2022
 
Index multiplier
HKD0.00026
Exchange rate
THB4.25: HKD1
Settlement price
The settlement price is the underlying price used to calculate the XYZ Index Futures Series July 19 (Final Settlement Price) announced by the exchange.

Case 1

The settlement price is higher than the exercise price
The DW issuer must pay the cash settlement to the DW holders.

If the settlement price on 29 July 2022 is 25,500 points and the exchange rate is THB4.25: 1 HKD, the calculation will be as follows:

Calculation method
Cash settlement= (settlement price – exercise price) x index multiplier x exchange rate
= (25,500 - 25,000) x 0.00026 x 4.25
= THB0.5525 per 1 DW
Results
  • The DW issuer must pay THB0.5525 per 1 DW to the DW holders
  • The holder’s capital gain is the difference between the DW premium and exercise expenses and the cash settlement

Case 2

The settlement price is less than the exercise price
The DW issuer does not need to pay the cash settlement to the holders

If the settlement price on 29 July 29 2022 is ≤ 25,500 points, the calculation will be as follows:

Calculation
Cash settlement= (settlement price – exercise price) x index multiplier x exchange rate
= (25,000 - 25,000) x 0.00026 x 4.25
= THB0 per 1 DW
Results
  • The DW issue does not need to pay the cash settlement
  • A holder's loss is equal to the amount paid for the DW
Precautions to take prior to trading foreign underlying DWs
alert-noti
Investing in DWs is riskier than investing in common stocks because it is a leveraged instrument that magnifies losses. Furthermore, DW has a limited lifespan, and if an investor holds the DW until its expiration date, it may become worthless.
alert-noti
The trading time difference between the DW and its underlying foreign index may impair the market maker's ability to maintain market liquidity, causing the DW price to diverge from the underlying price.
alert-noti
Exchange rates and market conditions can both have an effect on the price or value of a foreign underlying DW.
Foreign underlying indexes
IndexOverviewIndex publisherIndex ConstituentsTicker CodeMore

Hang Seng Index (HSI)

The Hang Seng Index tracks the largest companies, listed on the Hong Kong Stock Exchange, that have the highest combined market capitalization and liquidity

Hang Seng Indexes Company Limited since 1969

Over 60 companies representing 4 main industries including Finance, Properties, Commerce and Industry, and Utilities

Bloomberg : HSI
Refinitiv : .HSI

foreign 5 

Hang Seng China Enterprises Index (HSCEI)

The Hang Seng China Enterprises Index tracks large companies incorporated in mainland China that are traded on the Hong Kong Stock Exchange (H shares) with the highest combined market capitalization and liquidity.

Hang Seng Indexes Company Limited since 1994

Approximately 50 H shares representing major industries like Information Technology, Finance, Commerce and Industry, and Properties

Bloomberg : HSCEI
Refinitiv : .HSCEI

foreign 5

Hang Seng TECH Index (HSTECH)

Hang Seng TECH Index tracks large technology companies that are listed on the Hong Kong Stock Exchange

Hang Seng Indexes Company Limited since 2020

Approximately 30 technology companies from major industries including Information Technology, Finance, Commerce and Industry, and Properties. Examples of listed stocks include Alibaba, Tencent, Meituan, and Xiaomi

Bloomberg : HSTECH
Refinitiv : .HSTECH

foreign 5

Dow Jones Industrial Average (DJI)

It is a price-weighted index that tracks prominent companies listed on US stock exchanges including the New York Stock Exchange (NYSE) and the Nasdaq

S&P Dow Jones since 1896

About 30 companies that are traded on the NYSE and the Nasdaq

Bloomberg : INDU
Refinitiv : .DJI

foreign 5 

Nasdaq-100 (NDX)

The index tracks large companies that are non-financial companies that are listed on the Nasdaq Stock Market (“Nasdaq”)

Nasdaq since 1985

100 big stocks that are traded on the Nasdaq such as Apple, Tesla, Facebook, Microsoft, and Google

Bloomberg : NDX
Refinitiv : .NDX

foreign 5

S&P 500 (SPX)

The index is a good indicator of the performance of the US stock exchanges because it includes a diverse representation of large companies from various key industries with the highest combined market capitalization and liquidity.

S&P Dow Jones since 1957

500 large companies that are listed on the US stock exchanges such as 1. The New York Stock Exchange (“NYSE”) 2. The Nasdaq Stock Market (“Nasdaq”) 3. Cboe Exchange, Inc. (“Cboe”)

Bloomberg : SPX
Refinitiv : .SPX

foreign 5 

MSCI China A 50 Connect Index

MSCI China A 50 Connect Index follows an sector balanced approach by selecting 50 of the largest China A shares investable through the Stock Connect and ensuring diversified sector allocation and balanced representation of the broader China A market. It is designed to enable international and domestic investors to track China’s sector leaders, get exposure to leading stocks in key sectors, and serve as the basis for index-linked ETFs and ETNs and other financial products.

MSCI Inc.

The constituent stocks are listed on the Shanghai and Shenzhen exchanges and accessible through the Northbound Stock Connect channel. The constituents represent all of the Global Industry Classification Standard (GICS) sectors.

Bloomberg: MXCNA50C Index

Refinitiv: .MICN0A5C0PCY

foreign 5