19.3.16

Everything about Warrant

What is a warrant?

A warrant is an investment product that provides leveraged exposure to a market, offering unlimited profit potential with limited risk. Traders can use warrant to make profit from both a rising or a falling market if he can predict the market movements in either diretion.

There are many types of warrant, those are based on the price movement of the underlying asset such as: Stocks, Indice, Commodities, Future...

Warrant offer trading opportunities in the major US stock, market indices, agricultural, anergy and metal markets. This includes S&P500, Nasdaq100, Gold, Crude Oil, Coffee and Soybeans, Currency...

With warrant, traders can make money in a rising (Bull Warrants) or a falling market (Bear Warrant). When traders buy a warrant, he doesn't really own the actual asset. The value of the warrant is derived from the value of the asset, but does not require traders own the actual asset.

Securities market is risky but warrant  is structured to offer limited risk. The maximum risk on a warrant is the cost of the warrant.

When traders predict market will rising, he buy a Bull Warrant. Bull Warrant makes money in a rising market and risk a fixed amount loss in a falling or a static market.
Bull Warrant: Asset price must higher than trigger point before expiry to make profit

When traders predict market will falling, he buy a Bear WarrantBear Warrant makes money in a falling market and risk a fixed amount loss in a rising or a static market.
Bear Warrant: Asset price must lower than trigger point before expiry to make profit