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Warrant
Structure and featuresComparison with call optionsTypes of WarrantsTraditionalNakedThird Party WarrantsGovernment issuedTraded warrantsPricing
Structure and featuresComparison with call optionsTypes of WarrantsTraditionalNakedThird Party WarrantsGovernment issuedTraded warrantsPricing
Types of Warrants
A wide range of warrants and warrant types are available. The reasons you might invest in one type of warrant may be different from the reasons you might invest in another type of warrant.*Equity Warrants: Equity warrants can be call and put warrants.
**Call warrants give you the right to buy the underlying securities
**Put warrants give you the right to sell the underlying securities
*Covered Warrants: A covered warrant is a warrant that has some underlying backing, for example the issuer will purchase the stock before hand or will use other instruments to cover the option.
*Basket Warrants: As with a regular equity index, warrants can be classified at, for example, an industry level. Thus, it mirrors the performance of the industry.
*Index Warrants: Index warrants use an index as the underlying asset. Your risk is dispersed—using index call and index put warrants—just like with regular equity indexes. It should be noted that they are priced using index points.
That is, you deal with cash, not directly with shares.