Derivatives very similar to options, giving the holder the right to buy or sell underlying securities at a fixed price; not the same as company issued share warrants.... more on: Covered warrants
A warrant which entitles the warrant holder a right to purchase a security issued by a person who is not the issuer of that security. A specified amount of the underlying security shall be reserved or secured for the exercise of the warrant.
a financial instrument tha bestows on the holder the right, but not an obligation, to buy or sell an asset at a specified strike price during, or at the end of, a specified time period
Derivative call warrants on shares which have been separately deposited by the issuer so that they are available for delivery upon exercise.
Issued by a third party, usually a major securities house. Those issued on single stocks and share indices can be traded on the London Stock Exchange trading service. Covered warrants may be issued on baskets of shares, debt securities, currencies, metals, and oil.
Covered warrants have recently been introduced to the London stockmarket. Investors buy the right to buy, or sell, a share at a fixed price for a fixed period. Loss is limited to the cost of buying the warrant (hence the expression covered). Gains can be substantial. For example, if, in 2001, you had paid 50p for the right to sell Cable & Wireless shares at 300p, expiring in December 2004, you would have been delighted to see them fall to below 40p. Alternatively, if you were a holder of Cable & Wireless shares in 2001 and feared they might fall but didn't want to sell, buying the covered warrants would have limited your maximum loss to 50p a share. Also, you would still have gained if the shares went up, though by 50p less than if you had done nothing.
Covered Warrants allow the buyer the right - but not the obligation - to buy or sell an asset at a specified price on, or before, a specified date.
