Warrants are an exiting way of stock exchange trading with a limited amount of invested capital. You invest in the change of value for a share, an index or other assets without bying the actual underlying asset. This is possible due to the leverage inherent in warrants, where percentage movements in the price of the underlying are amplified. Exchange traded warrants are as easy to trade as shares. Warrants have been traded on the Exchange since 1995 and thanks to the market making in the warrants the liquidity is very high.
What characterizes a warrant
A warrant is a security that gives the holder the right to buy or sell an underlying asset, at a specified price, also called strike price. For many investors, warrants will seem similar to options but warrants typically have longer maturities than options, and are issued over a wider range of assets. Warrants are issued by financial institutions which will determine the terms for the specific warrant.
What does OMX Nordic Exchange offer
At OMX Nordic Exchange there are many warrants with an exciting variation of underlying assets to choose from. Warrants are divided into three types to make it easier to find and compare different warrants.
“Plain vanilla” is the heading of simple buy or sell warrants with shares, indices or currencies as underlying.
“Knock outs” are warrants that terminate and cease to exist, if the relevant price of the underlying asset touches a predetermined barrier. On the expiry date the value of the knock out warrant is the difference in price of the underlying and the strike price in the warrant.
“Exotics” are warrants with a more complex structure.
How does the trading in warrants work
You can trade warrants via your bank, broker or Internet broker. Banks often offer trading via their Internet port. You can trade warrants on the Exchange when they are issued or in the secondary market. Perhaps you don’t want to keep your warrants until they expire, but want to sell them before the expiration date. The market maker will ensure the possibility to do so by continuously quoting prices in the warrant on the Exchange.
To find more information about specific warrants and certificates please go to our issuers web sites;
