If you have traded on Forex, you may be familiar with options. These derivatives are used for hedging, as you can buy or sell a currency pair at a fixed price and date. Warrants are similar instruments that circulate in the stock market. They allow you to limit risks and secure the best prices. Here is an overview of the instrument.
In India, traders can use a wide range of financial tools. Stocks can be bought and sold through global brokers. You can profit from the performance of the largest world corporations. All you need is a live trading account, dedicated software, and brokerage services. Derivatives like warrants are linked to stocks.
Warrant Specifications Vary
Generally, these are similar to specifications for options. However, not all warrants are identical. Even within the same market, different warrants may be based on different terms. The elements that often vary are:
the expiration date,
the multiplier, and
lowest trading size accepted (e.g. 100 warrants).
Be Careful With Warrants
As derivatives, warrants share some of their features with options. A warrant may give you the right to buy or sell a stock or a stock index. Due to their highly leveraged nature, they are seen as a high-risk instrument. Today, they can be bought and sold online.
Get The CEO Magazine to your Door Steps; Subscribe Now