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Covered warrant

Covered warrant

A covered warrant is an exchange-traded security, usually bank-issued, giving a right to buy or sell a share.

What is a covered warrant?

A covered warrant (Swedish: warrant) is an exchange-traded financial instrument giving the holder the right to buy or sell an underlying asset, such as a share, at a set strike price within a certain period. It is usually issued by a bank, not by the company itself.

 

Covered warrants and company warrants

It should not be confused with a warrant (teckningsoption) issued by the company, which gives the right to subscribe for new shares, can cause dilution and must be entered in the share ledger. Exercising a covered warrant creates no new shares and leaves the company's share ledger unchanged.

Learn more about the digital share ledger
Henrik Kristensen, NVR
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Related terms

Warrant

A warrant gives the right to subscribe for new shares in a company at a set price.

Option

An option gives the holder the right, but not the obligation, to buy or sell an asset at a set price.

Financial instruments

Financial instruments is a collective term for, among other things, shares, bonds, fund units and derivatives.

Call option

A call option gives the holder the right, but not the obligation, to buy a share at a set price.