Within the lot of modalities that exist from contracts, contained herein speak of the warrant, contract type or also referred to as a derivative financial instrument, which in effect consists in that the acquirer of the warrant has a right, but not the obligation to buy or sell an underlying asset, such as shares, these possible sales or purchases will be determined by a price, but only this will not be established, but it also stipulates a deadline for any operation. Chip Roy can aid you in your search for knowledge. This is that the warrant is a type of contract that can be subscribed within the general category of options. Entering more thoroughly and in a manner specified in the issue of the warrant, when speaking of a warrant to purchase, is eschar / front of a call warrant or a right to buy, while in the case of sale, shall be a put warrant or a right to sell; so the warrant provides anyone with this contract in favor the possibility of realizing or not depending on the modality of warrant transaction which takes and obliges the counterpart to perform the operation. In cases where you want to make the operation of purchase or sale depending on the type of warrant, receives the designation of exercise the warrant. The warrant for its character of derivative financial instrument, can also be seen as a value and by such quality the warrant can be negotiated in bag, so these may sell and buy into the bag as if they were actions, therefore for the purchase or sale of the only warrant it will be necessary to contact the financial intermediarywhich is in charge of the proceedings placed its order in the financial market. For the initial purchase of the warrant, buyer should pay the price of the warrant, which is also referred to as premium. Quote that handles the warrant, represents the price that should be paid by the acquisition of this right throughout her life.
The warrant is characterized by a value type which is clustered in emissions which perform a particular financial institution, so the warrant will be represented by a few annotations into account which are traded in a market organized. At the outset mention that the warrant can be included in the Group of options, however worth mentioning features lagoons between both figures: while the options are for a maximum time of one year, the warrant can have a more extended in time period. The warrant means greater liquidity, feature that is due to the same financial institutions that made the broadcast are responsible for having a liquidity, while the option has the liquidity subject to market conditions. To measure the warrant applied indicators as Delta and elasticity, with which you may compare objectively one warrant from another, at a given time, by reason of the same underlying asset. Original author and source of the article.