Direct me on WARRANTS!!!

Posted by HugeBull > 2014-04-06 00:53 | Report Abuse

Hi everyone! As a beginner, I was trading stakes on original stocks. But I found out here most people are talking about high profitability from warrants. The question is can warrants be sold before exercise date (expired date)? I have some knowledge about call and put options and also quite used to them in cashflow 202 game. Call options are like warrants here, isn't it? But the issue is they are American style warrants, right? here I learnt that warrants from our bursa is mostly European style that means we can't sell until expired dates. But I found some experts here talking about they sold warrants in a week/days far before expired dates. Why is that? What's your opinion on original stocks? Is it more clever to invest on warrants rather than main stocks? Thanks in advance!

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6 comment(s). Last comment by HugeBull 2014-04-08 12:25

Icon8888

18,658 posts

Posted by Icon8888 > 2014-04-06 08:38 | Report Abuse

Warrants are American not european

HugeBull

13 posts

Posted by HugeBull > 2014-04-06 19:18 | Report Abuse

thanks for the reply Icon8888! Now I got it. American means I can trade anytime. Then why the hell they still announce as European style call warrants!!!!

Icon8888

18,658 posts

Posted by Icon8888 > 2014-04-06 22:34 | Report Abuse

You seriously have a lot of catch up to do. Suggest you find a remisier to coach you

GogoChiao

371 posts

Posted by GogoChiao > 2014-04-06 22:37 | Report Abuse

American style and European style also got. European u cant exercise before maturity and American u can exercise before maturity.

Yes, warrants can be sold before maturity. its like stocks u can buy and sell. No doubt it has high profitability but its risk is also high due to its gearing. U make loss faster than mother and make profit faster than mother also.

GogoChiao

371 posts

Posted by GogoChiao > 2014-04-06 22:41 | Report Abuse

you can sell the warrant anytime. but u cant convert the warrant to shares anytime if it is European style.

If you are good in arbitraging, then of coz warrant is a better instruments to play with. but if you are bad at it, then stay away.

Mother share has the advantage of which warrant does not have
1) u can get dividend if the share pays dividend
2) u can get bonus, split, etc
3) u can have voting rights

Warrant's advantage is
1) High gearing depending on the price
2) Cheaper hence u can buy more units

HugeBull

13 posts

Posted by HugeBull > 2014-04-08 12:25 | Report Abuse

I take account on that! Thanks a lot for the explanation gogochiao.

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