This paper empirically examines the pricing errors of Chinese put warrants，and finds that put warrants are systematically overvalued． Using high frequency data，the paper in vestigates the reasons of systematic over valuation according to prospect theory and resell option theory． The results show that the speculation behavior of individual investors caused by short selling constrain and heterogeneous belief is one of the most important reasons leading to the overvaluation of put warrants． However，the weakness of Chinese warrants’issuing mechanism also plays a very important role in explaining the overvaluation of put warrants． The issue cost，which can be regarded as the reference price of issuers，has significant effects on the market price of put warrants，and can well explain both the levels and variations of the pricing errors of put warrants． The mechanism that only a few qualified security companies are permitted to create warrants and the fact that the exercise prices of newly issued warrants cannot be adjusted according to underlying stock prices make put warrants an instrument of speculation． In sum，the synergism of speculation behaviors and the weakness of the issuing mechanism lead to persistent systematic over valuation of put warrants．