Warrants are a derivative instrument issued by an independent party (the issuer) such as a merchant bank or an investment house, in respect of an underlying asset (share or index). Warrants give their holder the right, but not the obligation, to buy (Call Warrants) or to sell (Put Warrants) the underlying at a predetermined price (Strike or Exercise Price), at a fixed date (European style) or until (American style) such date (Expiry date).

Warrants trade like any share on the JSE Securities Exchange South Africa. Warrants trade via the Securities Exchange’s Electronic Trading System (SETS) executed via any registered stockbroker and are settled under the STRATE (Share Transaction Totally Electronic) System.

Warrants are short-term trading instruments that will respond to moves in the underlying security. At all times the warrant will move in line with the underlying security and can be traded continuously and do not need to be held until expiry. Call warrants can be traded without having to exercise the underlying and this makes them ideal as short-term trading instruments.