| | | | Warrants give the owner the right, but not the obligation, to buy shares in the issuing company at a future date for a predetermined price. The price of a warrant is linked to the underlying share, and will rise and fall in line with the share price, although due to the level of gearing, with greater volatility. Warrants do not have any voting or dividend rights.
If the share price is above the exercise price, the warrant will be exercised i.e. the shares will be purchased and a profit made.
If the share price is below the exercise price or you are ‘out of the money', the warrant is worthless. | | | |
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