Covered warrants are are issued by financial institutions and are listed as full tradeable securities on the London Stock Exchange. They are flexible tools offering leveraged exposure to a wide range of underlyings such as equities, baskets, indices, currencies and commodities. They are quoted throughout the trading day and offer all the benefits of transparency and liquidity.
A covered warrant gives the holder the right, but not the obligation, to buy ('call' warrant) or to sell ('put' warrant) an underlying asset at a specified price (the 'strike' price or 'exercise' price) by a predetermined date. The price paid for this right is the 'premium' and with covered warrants you cannot lose more than this initial premium paid. They are limited liability instruments so there are no further payments or margin calls required to maintain a covered warrant position. Covered warrants offer a flexible alternative to private investors who seek to gain the leverage benefits of derivatives, but who wish to limit their risk.
To find out more about offering Structured Products to your clients, or about becoming an issuer of Structured Products, please contact:
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