One of the most common questions when trading covered warrants is: "When can I sell after buying?" Understanding the settlement rules is crucial for effective trading. In the Vietnamese market, covered warrants follow a T+1.5 settlement rule that determines when you can sell your purchased warrants.
Understanding T+1.5 Settlement
The Vietnamese stock market operates on a T+1.5 settlement system for covered warrants. This means that after you buy a covered warrant on day T (today), you can only sell it starting from the afternoon session on day T+1.5 (one and a half trading days later).
Key Rule
If you buy a covered warrant today, you can sell it in the afternoon session on the day that is 1.5 trading days later. This is a regulatory requirement specific to the Vietnamese market.
Practical Example
Let's break down a practical example to understand how T+1.5 works:
Example: Monday Purchase
- Purchase Day (T): Monday
- You buy covered warrants on Monday during the morning or afternoon session.
- T+1: Tuesday
- Tuesday is the first full trading day after your purchase. You still cannot sell during this day.
- T+1.5: Wednesday Afternoon
- You can sell your covered warrants starting from the afternoon session on Wednesday. This is when the T+1.5 settlement period is complete.
Why This Matters
Understanding the T+1.5 settlement rule is important for several reasons:
- Trading Strategy: You need to account for this settlement period when planning your trades. You cannot exit a position immediately after buying.
- Risk Management: Since you cannot sell immediately, you must be prepared to hold the position for at least 1.5 trading days, which exposes you to market movements during this period.
- Liquidity Planning: If you need to free up capital quickly, you must plan your purchases accordingly, knowing you'll need to wait until T+1.5 to sell.
- Compliance: Attempting to sell before the T+1.5 period will result in your order being rejected by the trading system.
More Examples
Trading Day Examples
Buy on Tuesday → Sell on Thursday Afternoon
T (Tuesday) + 1.5 = Thursday afternoon session
Buy on Wednesday → Sell on Friday Afternoon
T (Wednesday) + 1.5 = Friday afternoon session
Buy on Thursday → Sell on Monday Afternoon
T (Thursday) + 1.5 = Monday afternoon session (weekend doesn't count)
Buy on Friday → Sell on Tuesday Afternoon
T (Friday) + 1.5 = Tuesday afternoon session (weekend doesn't count)
Trading Hours
Understanding the trading hours for covered warrants is essential for effective trading. The Vietnamese stock market operates on a specific schedule:
Daily Trading Schedule Timeline
- ATO (At The Open)
- 09:00 ~ 09:15 - Avoid trading
- Morning Session
- 09:15 ~ 11:30 - Recommended trading hours
- Lunch Break
- 11:30 ~ 13:00 - Market closed
- Afternoon Session
- 13:00 ~ 14:30 - Recommended trading hours
- ATC (At The Close)
- 14:30 ~ 14:45 - Avoid trading
Avoid ATO and ATC Sessions
ATO (At The Open): 09:00 ~ 09:15 - Opening session before regular trading hours
ATC (At The Close): 14:30 ~ 14:45 - Closing session after regular trading hours
Important: Market-makers may not place orders during ATO and ATC sessions. It is recommended that investors avoid trading during these periods to ensure better liquidity and execution quality.
Important Considerations
Remember
- • Only trading days count toward the settlement period (weekends and holidays are excluded)
- • You can only sell starting from the afternoon session on T+1.5, not during the morning session
- • Trade during regular sessions (09:15-11:30 and 13:00-14:30) for better liquidity
- • Avoid ATO (09:00-09:15) and ATC (14:30-14:45) sessions as market-makers may not be active
- • This rule applies specifically to the Vietnamese market and may differ from other markets
- • Always check with your broker for the most current settlement rules and any exceptions
Planning Your Trades
When planning your covered warrant trades, always factor in the T+1.5 settlement period. This means:
- Calculate Your Exit Window: Know exactly when you'll be able to sell after making a purchase. Mark this date and time in your trading calendar.
- Assess Market Risk: Since you cannot exit immediately, evaluate whether you're comfortable holding the position for at least 1.5 trading days given current market conditions.
- Monitor Market Movements: Keep a close watch on the underlying asset and market conditions during the settlement period, as you'll need to wait before you can react.
- Set Alerts: Set price alerts or notifications to remind you when the T+1.5 period is complete and you can sell your position.
Understanding and planning for the T+1.5 settlement rule is essential for successful covered warrant trading in the Vietnamese market. By accounting for this requirement in your trading strategy, you can make more informed decisions and better manage your risk exposure.