I bought a call warrant on a stock underlying in the morning trading session, when the underlying was traded at HK$50. The underlying price then dropped to HK$48 and the liquidity provider’s quote also dropped. In the afternoon, the price of the underlying went back to HK$50 but the liquidity provider’s quote was still lower than the price at which I bought the call warrant, why?

In addition to the underlying price, the liquidity provider’s quote also depends on a number of other factors. Assuming all other factors remain constant, although the underlying price went back to HK$50 from HK$48, it is likely that the increase in the underlying price was offset or even outweighed by the decrease in the implied volatility of the warrant, hence lowered the warrant price.