Warrants

Dealing in warrants is as easy as dealing in ordinary shares

What you should know about dealing in warrants

Warrants are options issued by third parties and traded on the ASX ITS platform, making them as easy to trade as ordinary shares.

This differs from Exchange Traded Options (ETOs) which are issued by and traded on the Australian Options Market.

A fundamental difference for investors is the requirement that you must own a warrant before selling it, which is not the case for ETOs.

The length of time that a warrant is held depends on the investor’s time horizon, although all warrants have a defined term after which they must be exercised or expire.

Types of Warrants

There are many types of warrants and many warrant issuers. The main warrant types are:

• Plain call and put warrants (including barrier warrants)
• Installment warrants (these securities carry the dividend entitlements of a fully paid shareholding under a deferred payment arrangement)
• Index warrants (local and overseas)
• Capital plus warrants
• Endowment warrants

Liquidity risk

Liquidity risk is considered to be low as the issuer of the warrants normally provides both a bid and offer in the market to facilitate price discovery and trading.

Please see Understanding Trading and Investment Warrants.

For more information on our services please contact your MINC Stockbroking Investment Advisor.