Types of Warrants

Investment Warrants

Investment warrants tend to be longer dated and less frequently traded. They have a lower risk/return profile and often have a higher face value than trading warrants.

Investors in investment products may be looking for long-term leveraged exposure to the underlying instrument. They may also be attracted to other features of some investment warrants, such as an entitlement to dividends, or a capital guarantee on the initial investment. Instalments are the most popular type of Investment warrant and account for more than 70% of total warrants on issue.

Types of investment warrants

  • Ordinary Instalments - provide investors with all the potential benefits of capital growth, dividends and franking credits. 
  • Rolling Instalments - Are similar to a series of consecutive ordinary instalments where the holder can elect to roll from one series to the next. At the reset date the loan amount is adjusted to maintain the initial level of gearing.
  • Self-Funding Instalments - Use the dividends received on the underlying share to reduce the loan amount, potentially creating a positively geared investment. You remain entitled to the franking credits attached to the share.

Alternate types of Investment warrrants are Structured Investment Products and Endowments.

Benefits of investment warrants

  • Instalments - offer leverage
  • Structured Investment Products - offer capital protection
  • Short or long term exposure
  • Tailored to meet investors specific requirements
  • Tax benefits
  • Limitation of loss
  • Provides diversification

For more information on investment warrants please view the extensive range of warrants booklets and brochures.

Find out more about Investment warrant strategies.

Trading Warrants

Trading warrants are a versatile trading instrument. They enable you to gain a leveraged exposure to an underlying instrument in a rising or falling market.  Trading warrants can also be used to manage risk on an investment portfolio. Trading warrants can be either call or put warrants.

Predominantly trading warrants are used for speculative purposes, trading the direction of an underlying instrument over the short term.  The trade off is potentially a high return for taking on high risk. 

Types of trading warrants

  • Call and Put - Most common type of trading warrants. Issued over shares, indices and currencies. Call and Put trading warrants give the holder the right to buy (call) or the right to sell (put) an underlying asset.
  • Knock-out - Equity and Index knock -out warrants are essentially call and put warrants with a knock-out feature. The barrier or knock-out will cause the warrant to terminate before the original expiry date.
  • MINIs - MINIs are a share tracking warrant product that allows investors to participate in the movement of the underlying instrument on a one for one basis. They are issued over shares, indices (domestic & international), currencies and commodities.
  • Guaranteed Stop Loss MINIs (GSL MINIs) - Guaranteed Stop Loss MINIs or GSL MINIs are a variation on the traditional MINI where the stop loss is always at the strike price of the underlying asset. Investors pay an additional premium on top of the MINI value for this feature.

 

Benefits of trading warrants

  • Trading warrants offer you the ability to gain leveraged exposure to the movement of the underlying asset
  • Call warrants enable you to lock in a purchase price for your shares
  • Put warrants enable you to lock in a sell price for this asset
  • Limitation of loss
  • Portfolio protection

Risks of trading warrants

  • The underlying asset fails to perform as you expected.
  • When investing in trading warrants, the maximum amount at risk is your initial investment (plus transaction costs)
  • Trading warrants offer leveraged exposure, magnifying percentage profits and losses

Find out more about Trading warrant strategies.