if you currently hold covered warrants in your ii account, these are now traded on a sale only basis as we are unable to provide the comprehensive key investor information documents required under recent regulation for this type of instrument.
Covered warrants are no longer available to new investors through ii.
What are Covered Warrants?
Covered warrants give the investor the right, but not the obligation to buy (calls) or sell (puts) in the underlying asset.
Their aim is to replicate the same financial exposure as buying (call) or selling (put) an asset such as a share, index, commodity or exchange rate at a predetermined price (strike price) on a predetermined date (expiry). The lifespan to expiry is usually between 3 months and 3 years from issue. If held until expiry, the cash value of the warrant (if positive) will be credited to the investor.
Risks - trading covered warrants
Before trading you should fully understand the nature of covered warrants and your exposure to the risk involved.
The geared nature of covered warrants means that a relatively small movement in the share price of the underlying asset will result in larger movements in the value of the warrant. Therefore, covered warrants provide the opportunity for greater returns than ordinary share dealing but also greater risks and potential losses. If you are in any doubt you should consult an Independent Financial Advisor.