Warrants

Why trade warrants with Phillip?

  • One account to trade warrants and multiple financial products
  • Trade Anytime, Anywhere with POEMS trading platform
  • Dedicated Trading Representatives to assist you

Trading Warrants

Warrants gives the holder the right but not the obligation to purchase securities from the issuer at a specific price within a certain time frame.

Benefits
  • Lower capital outlay with leverage
  • No margin call
  • Ability to go long or short
  • Limited Loss – maximum potential loss is limited to the total amount paid for the warrants, which is a fraction of the underlying asset
  • Transparent and flexible – listed and traded on the exchange, allowing investors to buy and sell warrants like shares
  • Diverse market access as some index and basket warrants give investors exposure to a sector or a market, eliminating the need to trade individual stocks in a market portfolio
  • Liquidity
Risks
  • Leverage is a double-edged sword where losses can be magnified when the value of the underlying asset moves against the warrant position
  • Credit risk – this occurs when warrants are exercised but the warrant issuer is unable to fulfill its obligations
  • Extraordinary event – the warrant issuer may declare a lapse of the warrant or bring forward the expiry date
  • Limited lifespan – unlike the underlying asset, warrants have expiration dates and investors holding onto warrants that expire at-the-money or out-of-the-money will lose their investment capital
  • Issuer risk – warrant holders have no preferential claim to any assets that an issuer may hold in the event that they are unable to fulfill their obligation