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Warrants
Warrants are securities issued by a company, which give the holders the right to purchase shares in the company at a specific price at a future date. Warrants are tradable in their own right, and their value will go up and down as the price of the shares to which they relate goes up and down. One of the features of trading warrants is "gearing". This means that a small rise in the share price results in a large rise in the value of the warrants, and a fall in the share price has an equally dramatic downward effect on the value of the warrant.
| Five Key Benefits of trading warrants with Halifax Share Dealing |
| 1. Investors can purchase shares at later date at a predetermined price with a warrant |
| 2. Warrants should be seen as a long term investment - they can be issued with a lifetime as long as 15 years! |
| 3. The owner of a warrant doesn't have to buy the shares. They have a right, not an obligation. |
| 4. The shares are issued directly from the company who offered the initial warrant |
| 5. Highly competitive dealing charges - deal online for only £11.95 (excluding international trading) or over the telephone from £15 |
Warrants can seem complicated and so to help you out, here is a worked example:
| Goodco issues new ordinary shares at 50p each. At the same time it gives shareholders warrants entitling them to buy shares at 100p at any time until 1st January 2010. Warrants have no right to dividends and no voting rights, so their value is tied entirely to the relationship between their exercise price and the share price of the company. If the share price is below the exercise price, the warrants are said to be "out of the money". i.e.exercising the warrants is more expensive than buying the shares on the market. If the share price rises above the exercise price, they are "in the money ", which is the opposite. |
Also the value of a warrant can easily drop to zero (if the exercise price is higher than the share price) and it will definitely be zero once the time for exercise has passed.
Warrants are complex instruments. Before you can begin trading warrants, we must assess your knowledge and experience and advise you of the risks involved relevant to trading warrants. If you want to begin trading warrants you must complete the 'Warrant Appropriateness Test'. This will be done either online or over the telephone as part of the dealing process.
Opening Your Account
Your Halifax Share Dealing Account can be opened with a £100 initial deposit. This can then be invested into any eligible investment of your choice.
Transfer from your existing UK stock broker- Find out more about how to transfer from your existing UK stock broker to a Halifax Share Dealing account!
Next Steps
|
Apply online for an account - it only takes a few minutes |
Telephone our UK based call centre on 08457 22 55 25* to find out more today (lines are open 8am - 9.15pm Monday to Friday and 9am -1pm Saturday excluding English Bank Holidays.)
Please remember the value of your investments and the income from them can go down as well as up. You may not get back the full amount you have invested. If you're in any doubt about the suitability of any of our products, or whether to buy or sell shares, you should consult an appropriate Financial Adviser.
Click here to view our Regulatory Information
Calls from BT landlines will cost a maximum of 4p per minute and a 6p call set-up fee. The price of calls from other telephone companies will vary. The call price is correct at 24th April 2008
