A call option on the shares of a company issued by a bank, where the bank has hedged its position in the underlying stock, usually by holding shares of the company in question. Dresdner Kleinwort Wasserstein financial glossary
————
A security issued by a party other than the issuer or originator of the underlying asset, giving the holder the right (but not an obligation) to acquire a share or bond at a specific price and date. London Stock Exchange Glossary
* * *
* * *
A warrant issued by a bank that enables the holder to buy shares in another company at a future date, for a price that is generally above the current market price of the share. Used as a trading instrument. For example, Merrill Lynch might issue covered warrants on shares of General Motors. They are covered because the issuer will hold at least some of the underlying stock into which the warrants may be exercised. Covered warrants are aimed principally at international investors looking for geared exposure to a specific stock, basket of stocks or even an entire index.
* * *
covered warrant UK US noun [C]
► FINANCE an agreement that allows a person, usually someone who is already a shareholder, to buy or sell an investment that is based on shares, bonds, etc. at a fixed price before a fixed date. Covered warrants are bought and sold through financial institutions that already own the shares, etc. connected with the warrant before they sell them to investors.
Financial and business terms. 2012.