Covered Warrant

Covered warrants are like options. They let investors buy or sell an asset when it reaches a certain price on or before a certain date. The issuer buys the underlying asset to hedge their risk, so it’s covered.

The “on or before a certain date” comes in when we look at the two different types of covered warrants. There are European covered warrants and American covered warrants. With European, the investor can only buy or sell on the specified date. With American, the investor can buy or sell anytime after they’ve purchased and before it expires.

“I thought you needed some fresh air, even if that air is filled with the foul stench of European socialism.” –Ron Swanson