Traditional corporate equity warrants

Introduction| Course| Q&As | Recommended reading| Quiz |

Introduction

Context

Warrants are for experienced investors who have an understanding of risk, and who want to exploit the gearing potential in warrants. This is one of the more hidden - and thereby inefficient - areas of the market, offering interesting opportunities to the shrewd investor.

Prior knowledge required

Very little prior knowledge is required, but the topic involves a fair bit of simple mathematics. Warrants should not be the starting point for a novice investor, and so, although not required, a good knowledge and experience of ordinary share markets is desirable.

Contents

1. Introduction
2. What is a warrant?
3. The warrant market
4. Advantages of warrants over shares - the magic of gearing
5. Further attractions of warrants
6. Disadvantages of warrants
7. Fundamentals - warrant terms
8. Fundamentals - intrinsic value and parity ratio
9. Basic analysis
10. Analysis - time value and premium
11. Analysis - gearing
12. Analysis - break-even and capital fulcrum point
13. Analysis -sample spreadsheets
14. Analysis - summary
15. Investing strategies
16. Dealing in warrants
17. Warrant exercise
18. Further topics
19. Further information
20. Conclusion

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