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Online Share Trading

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New trader

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FJC
Occasional Contributor
I am new to warrants trading. I think I understand the longs but the shorts I still don't get so well. Is there someone that would care to chat with me via e-mail regarding this. I want to understand it completely before I try it. English or Afrikaans, does not matter to me.
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10 REPLIES 10
surfer
Regular Contributor
hi would not recommend you trade warrants if you dont know the diference between going long or going short .with warrants you need to understand the difference between put and calls and also how time decay affects your profits.
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FJC
Occasional Contributor
I want to understand it. That is why I am asking for someone to teach me...!
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kwagga
Super Contributor
Go to the help menu, Online courses, Warrants course. Take note of the tips relating to what to look out for when buying the warrant. Personally I don't like them. The time decay on the warrant can be a killer and you're at the mercy of the market makers. Rules never to break - don't buy a warrant with a time decay <90 days, don't buy a warrant under 20c. Make the warrant matrix your best friend when putting in your buy and sell orders.
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FJC
Occasional Contributor
Thanks kwagga, I did do the warrants course as you mentioned but still have questions regarding put warrants. I notice that all put warrants on the JSE are european style. Does that mean I got to keep it until that date and hope I have guessed the price right? What is confusing me is when I want to put a order in for a out warrant...do you sell or buy it? And then at the price...which price? The price you want it to be traded on or the current price? Sorry, but I am still new to this trying to understand first before I waste my money...
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THRESHOLD
Super Contributor
You are trading in "warrants" - while the content of the right is the underlying option - you need to understand that you are not trading the option but a leveraged derivative thereof. Hence the potentially massive rate of decay. Selling the warrant does not represent the sale of the options but of the right thereto. If I may ask: As a novice, why are you trading warrants?
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THRESHOLD
Super Contributor
Although selling a put is like buying a call and selling a call is like buying a put; because the counterparty to the agreement is the "financial house" that issues the instrument (the issuer,) each must be bought or sold independently to "settle" that position - again - they are contractual arrangements with the issuer. Also - because you are not buying the underlying option - but rather a right thereto - the conditions are governed by the "house" that issues the warrant. These conditions can be so onerous as to alter the nature of the agreement to the point where it barely resembles an option at all. You can get fairly complete information "off" the likes of investopeida.
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THRESHOLD
Super Contributor
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TOPIX
Regular Contributor
For warrants. If you want to go long, you buy a Call warrant. As the price of the share rise, the price of the warrant will rise. Sell when you want to. If you want to go short, you buy a Put warrant. As the price of the share go down, the price of the warrant will rise. Sell when you want to. European or American warrants.... does not matter. You buy and sell when you want. If you want to convert your warrants into shares, you can instruct your broker to do that at any time with an American warrant. With an European warrant you have to wait till expiry to convert.
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FJC
Occasional Contributor
Thanks Topix, now it makes more sense. I am just doing this as a new found hobby. Not risking too much.
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Not applicable
AM A NEW TRADER ON WARRANTS, THE BEST SOURCE OF INFORMATION I USED FROM THE BEGINING: SEARCH FOR THE FOLLOWING- INVESTOPEDIA.COM SEARCH TUTORIALS ON YOUTUBE I STARTED TRADING ON MY OWN AND AS RESULT OF THE TUTORIALS, MYBET ON SASOL - AMERICAN CALL SEEM TO BE A GOOD DEAL. YOU NEED TO TAKE THE RISK AND GET STARTED.... I THINK YOU ARE AWARE RISK MEANS YOU CAN LOSE. GOOD LUCK
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