- Language: English
- 550 Pages
- Published: May 2012
- Region: Global
Andrew Mchattie On Covered Warrants: New Opportunities in an Exciting New Market
- Published: January 2002
- Region: Global
- Harriman House Publishing
The traditional company warrants market is set to be eclipsed by a new market which should offer huge opportunities for active investors. Revised regulations have paved the way for a new 'covered warrants' market in London.
- The number of warrants available for trading by private investors on the London Stock Exchange (LSE) will multiply many times over.
- Warrants will become available on a broad range of blue-chip companies, sector baskets, and on both UK and overseas indices.
- Investors will be able to buy both calls and puts.
- The vast majority of the new warrants will be exercisable for cash which will mean they can be traded free of stamp duty.
This book is intended as a primer for investors new to covered warrants, although more experienced investors may also find some value in the timely information about the formation of the new market in London. Readers used to dealing in traditional listed warrants in the UK will find the new covered warrants quite different. Jargon is unavoidable, but it is explained in the text and in the glossary at the back.
About Andrew McHattie
Andrew McHattie (MA Cantab) runs the investment publishing company, The McHattie Group and is chairman of McHattie Investment Management Ltd. He has been the publisher and editor of the Warrants Alert newsletter since 1989, and edits a range of other warrant publications and services including Warrants Alert Professional, The Warrants Directory, and Warrants Magazine. SHOW LESS READ MORE >
For novices and more experienced investors alike
Preview of chapters
Focus on UK but with lessons from elsewhere
1. What is a Covered Warrant?
Definition and basic attributes
Comparison between corporate warrants and covered warrants
2. Overseas Markets
Why not the US?
3. History & Development (i) - Out With the Old
From boom to bust in a decade
Limited issuance and liquidity
Lack of rights for warrant holders
Dead, or only resting?
4. History & Development (ii) - In With the New
The listing rules
The conduct of business rules
Method of issue
Time and trading
5. Types & Terms of Covered Warrants
Calls and Puts
European and American
Warrants per share
Changes to the terms
6. Pricing and Trading
Bid-only and offer-only warrants
7. Advantages and Disadvantages
Unlimited gains, limited losses
Ease of accessibility and transparency
Low transaction costs
Designed as a retail product
Opportunities in bull and bear markets
Range better than ever before
Aid to diversification
Ability to invest in assets otherwise unavailable
Rational price movement
Stock Exchange listing
Provision of information and education
Adverse price movements
Time value decay
Absence of price anomalies
Scope still limited
No benefit to, or direct link with, companies
No shareholders' rights
Need to have internet access
Capital gains tax
8. Analysis of Covered Warrants (i) - Getting started
Homework - prices and terms
Capital fulcrum point
9. Analysis of Covered Warrants (ii) - Advanced
A salutary example
Value at risk
Delta neutral hedging
Straddles and strangles
12. The Future
A look ahead to how the market might develop
Sources of Further Information