Covered Warrants

Discussion in 'Trading' started by osho67, Sep 26, 2002.

  1. These instruments are going to be introduced in uk next month. I would like to learn basics of these products . This is my first post on this board so please be kind. I am a novice trader and also interested in learning to trade futures. All replies much appreciated. Thanks so much.:confused:
     
  2. def

    def Interactive Brokers

    covered warrants are similar to options. couple of differences. Not sure of the rules in the UK but they may be subject to the credit risk of the issuer as opposed to the clearing house of the exchange. Also, they tend to be grossly overpriced in relations to the underlying options market in terms of volatility. Why? The issuers set the price and you can not short them. In my experience, if possible, trade the underlying options instead. Warrants are a brokers dream. Fat commissions and easily arbed against the underlying options.

    btw, and welcome to the forum.