Warrants

How to make extra income on your shares

Question: They tell me that I can earn extra income from dividends when buying warrants rather than shares, how does this work? Response: Instalment warrants gives holders the ability to gain exposure to price movements in underlying shares by making an initial payment and an optional second payment on expiry.   There are a number of…

What happens when a warrant is out-of-the-money, or in-the-money?

What happens when a warrant is out-of-the-money, or in-the-money?  Can you give me an example of both please. Response Warrants are financial instruments that derive their value from another underlying instrument and are issued by banks, governments and other institutions.  They are commonly and broadly split into two categories; investment style warrants, which are longer…

What is the difference between American and European style warrants?

When we talk about the “style” of a warrant we are referring to when the warrant can be exercised. Equity Warrants are very similar to equity options.  Much like equity options, warrants can be either call warrants or put warrants.  A call warrant gives the holder the right to buy the underlying security at some…

Why buy an instalment warrant instead of a share?

What are the advantages and disadvantages of buying an Instalment Warrant rather than just buying a share? Response: Instalment warrants are listed securities which trade on the ASX and each instalment warrant evidences a beneficial interest in an underlying security. Instalment warrants enable investors to acquire the underlying share by paying “instalments” over time. An…

What are the pros and cons of instalment warrants

Instalment Warrants are listed securities which trade on the ASX and each Instalment Warrant evidences a beneficial interest in an underlying security. Instalment Warrants enable investors to acquire the underlying share by paying “instalments” over time. An amount is payable up front to acquire the warrant and a final optional instalment is payable if an…

Should I buy a warrant on the primary or secondary market?

What is the difference between buying a warrant from a warrant issuer and buying it on the ASX? What are the pros and cons of each? Response: Buying a warrant from a warrant issuer is often referred to as purchasing through the primary market. Buying a warrant on the ASX is referred to as a…

Can you please explain how instalment warrants are priced?

A number of factors are taken into account when determining the price of an instalment warrant. Not only are there pricing components to consider, but influences affecting price movements also need to be factored in. Let’s look at the four components which make up the price of an instalment: 1. Capital component this is equal…