The booklet (Warrants: Understanding trading and investment warrants), published by ASX (Australia Stock Exchange), 2006, is now available. Free download, Pdf format.

Warrants – A new investing alternative

The 1990s saw a dynamic financial market become established in Australia offering concepts that were innovative for private investors. In the past decade characterised by its innovation, the rapidly growing warrants market was at the cutting edge.

This was achieved by an increased variety of investing choices and opportunities for active traders and medium and long term investors. The growth in the use of warrants and the development of warrant concepts continue to create a new investing alternative for personal investors alongside traditional choices like shares, interest paying securities and investment trusts.

Warrants:

• are financial products traded on ASX;
• include a right to buy or sell a share or some other asset;
• have a set life during which they exist – a time period;
• serve a particular purpose that depends on the type of warrant: for example, to pursue a short term trading  opportunity; or to maximise the income potential or to maximise the capital gain that can be earned over a longer period.

Because different warrants serve different purposes, this makes it important to distinguish between them and appreciate exactly what they offer and how they can be used. Before you consider becoming involved in warrants you need to know the differences between call and put warrants, between different warrant types such as instalments and endowments, what index warrants do and how currency, commodity, portfolio and other warrants work.

You also need to understand the benefits and risks of trading or investing in warrants and the market generally, and what makes warrants different from the related investments on which they are based. All forms of investing have risks and within investment categories, like the warrant family, the different risks of participation should be appreciated in order to invest in an informed manner.

This booklet will provide you with a basic introduction to warrants that you can then work from.

John Wasiliev (From Introduction)

Download Warrants: Understanding trading and investment warrants

Pdf format, 532kb, 42pages.

Visit ASX Official Website

Australia Securities Exchange (ASX)

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