The table below summarises the advantages and disadvantages of covered warrants.
| Advantages | Disadvantages |
|---|---|
| Gearing and Leverage | Complexity |
| Unlimited gains, limited losses | Adverse price movements |
| Ease of accessibility and transparency | Premium |
| Good liquidity | Limited life |
| Transaction costs are low | Time value decay |
| Designed as a retail product | Absence of price anomalies |
| Opportunities in bull and bear markets | No income |
| Range better than ever before | Scope still limited |
| Aid to diversification | No benefit to companies |
| Ability to invest in assets otherwise unavailable | No shareholders’ rights |
| Rational price movement | Need to have internet access |
| Listing on London Stock Exchange | Capital gains tax |
| Provision of information and education | Credit risk |
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