Call and Put warrants
Call or put warrants are a versatile short term trading instrument. That provide investors with the opportunity to speculate, trade declining markets or hedge the value of investments. Call and put warrants are issued over shares, indexes, currencies and commodities.
A call warrant gives you the right to buy the underlying asset from the issuer at a specified price, on or before a particular date. The buyer of a call warrant usually believes the value of the underlying asset will rise during the life of the warrant, indicating a ‘bullish’ view of the market.
A put warrant gives you the right to sell the underlying asset to the issuer at a specified price, on or before a particular date. The buyer of a put warrant usually believes the value of the underlying asset will fall during the life of the warrant, indicating a ‘bearish’ view of the market.
A warrant can be issued over an underlying asset such as:
- domestic or international shares (equity warrants)
- domestic or international indices (index warrants)
- currencies (currency warrants)
The fourth letter in the ASX warrant code for trading warrants is "T", "U", "V" or “W”.
Each of those warrants have features such as an exercise price, expiry date, exercise style, conversion ratios and settlement method. However, the fact that they can be issued over different underlying assets introduces a number of variations in the treatment of some features, such as the index multiplier for index warrants.
The disclosure document outlines the terms and conditions for each warrant series. You should be familiar with those prior to trading. You can access information on how to find a disclosure document on the ASX website. Alternatively, you may contact your adviser or the warrant issuer.
To learn more about trading warrants, visit our online warrants class or understanding trading and investment warrants brochure.