|
Contracts that can be bought or sold and give the investor the right to buy the underlying stock at a set price are warrants. These are long term and can be held, sold or exercised.
The advantage is if the market rises, the contract can be traded for a premium above what the investor paid. Unlike traditional equity options, warrants offer a longer term feature. The risk is that they are normally priced out of the money (more than most options).
If the stock investor wishes to exercise the warrant they can (own the stock).
Warrants do not pay dividends.
Copyright  2006 American Investment Training, Inc.
|
