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.

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.

Which account should I choose to invest in Covered Warrants?

You can invest in Covered Warrants through our Trading account.

You will also need to fill in a suitability questionnaire to ensure that you understand the additional risks associated with trading in covered warrants before you trade.
Download the questionnaire