Warrants 

They are mostly option instruments traded on the stock exchange. Most of them are issued for a predefined period, usually 6 – 24 months. Warrants are a different form of option, which means that they guarantee the right to buy/sell the predefined underlying asset. They have a possibility of cash settlement or the delivery of the underlying asset. They are used as a form of hedging or as a speculation. In most cases, they are leverage products. It means that they offer a possibility either of high yield or huge loss.

The bank offers two variants:

Call Warrant: a speculation on the growth of the underlying asset

Put Warrant: a speculation on the fall of the underlying asset

Like options, warranties are sold for a fraction of the price of the underlying asset. (Emission ratio could be: 1:10, 1:100, 1:1000 / 0,1; 0,01; 0,001). Thanks to this, their price is much more volatile. Their current value is determined by the bank or the stock exchange in according to emission conditions. The price is influenced by the current price of underlying, the strike price, maturity, the emission ratio, the market interest rate and the volatility of the underlying asset.

Warranties have a predetermined strike price, at which it is possible to apply one´s right to buy/sell.

Other types include for example knock out or knock in condition (there is a barrier and in case of its achievement, the warrant vanishes or just arises.)

Due to the fact above, that it is a really high-risk instrument, it is recommended only to very experienced investors.