Covered warrants

Covered warrants are financial products, listed on the London Stock Exchange (LSE). They provide leverage exposure on an underlying asset such as UK and non-UK equities, global indices, commodities and currencies to private investors

Covered warrants offer unlimited potential profitability but, unlike certain other leveraged offers, your maximum loss is limited to your initial investment, no matter how badly the markets move against your view. They also provide all the benefits of an LSE listing: transparency, liquidity and their regulatory framework.

What is a covered warrant?

A covered warrant is a financial instrument which gives the holder the right, but not the obligation, to buy (Call) or sell (Put) an underlying asset at a predetermined price (the strike or exercise price) on a certain date (expiry date).

To acquire this right to buy or sell, covered warrants are purchased by paying a premium. They may subsequently be bought and sold at any time during their life, or exercised at maturity at the strike price pre-specified at the issue.

It is important to note that covered warrant investor’s risk is always limited to the initial investment (i.e. the premium paid).