What You Can Invest In
Covered Warrants
What are Covered Warrants?
There are two types of Covered Warrants - Puts and Calls - which give the buyer the right, but not the obligation to buy (Calls) or sell (Puts) a certain underlying asset, at a pre-determined price, on or before a pre-determined date.
How do they work?
Covered Warrants can be used by investors to gain the same level of exposure as buying ordinary shares but paying a fraction of the cost of the underlying stock. Just like shares, warrants can be bought or sold at any time. Unlike shares, however they have a limited life span - between 3 months and 3 years at issue, after which the cash value (if positive) of the warrant is automatically paid out to the holder. Also, unlike shares, warrants are exempt from stamp duty. Covered Warrants can be easily traded either online or over the telephone.
Warrant Theory:
Warrant Theory: Pricing Parameters
Warrant Theory: Sensitivity Coefficients
Warrant Theory: Trading Strategies
How risky are they?
Warrants are not suitable for all investors. They can be volatile investments and can expire worthless. You should not deal in warrants unless you understand their nature and your exposure to risk.
Learn more about Warrant Risk
Which account should I choose to invest in Covered Warrants?
You can invest in Covered Warrants through our Trading Plus or SIPP accounts.
Existing customers
You can upgrade your account to trade in Covered Warrants (and Listed CFDs) by visiting our Account Upgrades page. If you do not have one already, we will firstly need to upgrade you to a Trading Plus Account. This can be done easily once you have logged in. To upgrade today, simply log in and go to Account Administration/Account Upgrades.
