Warrants are among the most popular leveraged products on the market and enable investors to participate disproportionately in price movements of an underlying asset with a comparatively small capital outlay. But what exactly are Warrants, how do they work, and what should investors consider before investing? This article provides a concise introduction.<\/p>\n\n
Warrants are exchange-traded securitised derivatives that grant the holder the right to buy (Call Warrant) or sell (Put Warrant) an underlying asset \u2013 such as a share, an index or a commodity \u2013 at a predetermined price (the so-called exercise price or strike) up to a specified date. Unlike Mini-Futures and Warrants with Knock-out Open-End, Warrants have a limited maturity. Within this time frame, investors can position themselves for rising or falling prices \u2013 with clearly defined risk and potentially high returns.<\/p>\n\n
There are two basic types of warrants:<\/p>\n
Both variants offer leverage \u2013 small price changes in the underlying asset can have a significant impact on the price of the Warrant.<\/p>\n\n
A Warrant essentially consists of three key components:<\/p>\n
An investor purchases a Call Warrant with a strike of CHF 100 and a maturity of 6 months. The underlying share is currently trading at CHF 105.<\/p>\n
Illustrative price development:<\/p>\n
The price of a Warrant is influenced by several factors:<\/p>\n\n The closer the expiry date approaches, the more time value the Warrant loses \u2013 this is referred to as time decay.<\/p>\n\n Opportunities:<\/b><\/p>\n Risks:<\/b><\/p>\n Warrants are attractive instruments for experienced investors who wish to exploit short-term market opportunities with clearly calculable risk. The key advantage: the loss potential is limited to the invested amount, while profit potential can be substantial due to leverage.<\/p>\n However, it is essential to fully understand the maturity, strike and the interaction of the pricing factors. Investors who understand the mechanics and implement their market expectations in a targeted manner can unlock attractive return opportunities with Warrants.<\/p>\n Would you like to learn more about using Warrants in your investment strategy? Our experts will be happy to support you.<\/p>\n\n We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11<\/a>, email info@leonteq.com<\/a> or contact us here<\/a>.\n<\/p>\n <\/div>","url":"know-how-warrant","investmentThemeVerticalImageUrl":"https://structuredproducts-ch-pub-uat.leonteq.com/product-news/sidenav-banner/leonteq-know-how-sidenav+banner.jpg","thumbnailUrl":"https://structuredproducts-ch-pub-uat.leonteq.com/product-news/thumbnail/leonteq-know-how-thumbnail.jpg"}
\n \n Price factor<\/th>\n Movement of the price factor<\/th>\n Price of the Call Warrant<\/th>\n Price of the Put Warrant<\/th>\n <\/tr>\n <\/thead>\n \n Price of the underlying asset (metric: Delta)<\/td>\n ↑<\/span> rises<\/td>\n ↑<\/span> rises<\/td>\n ↓<\/span> falls<\/td>\n <\/tr>\n \n ↓<\/span> falls<\/td>\n ↓<\/span> falls<\/td>\n ↑<\/span> rises<\/td>\n <\/tr>\n \n Volatility (metric: Vega)<\/td>\n ↑<\/span> rises<\/td>\n ↑<\/span> rises<\/td>\n ↑<\/span> rises<\/td>\n <\/tr>\n \n ↓<\/span> falls<\/td>\n ↓<\/span> falls<\/td>\n ↓<\/span> falls<\/td>\n <\/tr>\n \n Dividend expectations<\/td>\n ↑<\/span> rise<\/td>\n ↓<\/span> falls<\/td>\n ↑<\/span> rises<\/td>\n <\/tr>\n \n ↓<\/span> fall<\/td>\n ↑<\/span> rises<\/td>\n ↓<\/span> falls<\/td>\n <\/tr>\n \n Remaining maturity<\/td>\n ↓<\/span> decreases<\/td>\n ↓<\/span> falls<\/td>\n ↓<\/span> falls<\/td>\n <\/tr>\n <\/tbody>\n <\/template>\n<\/ltq-table>\n\n 6. Opportunities and risks of Warrants<\/h3>\n
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7. Conclusion: Are Warrants the right product for you?<\/h3>\n