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IC guide to trading covered warrants

Created:
10 November 2008
Updated:
21 November 2008
Written by:
Dominic Picarda

Building and maintaining your portfolio of investments is a serious task. It requires most of a lifetime of hard graft, as well as the best tools on offer. There are few handier tools available to today's serious constructor of wealth than covered warrants. Whatever the markets are doing, these nifty implements empower you to boost your returns and minimise your risks.

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As with any new tool, you need to start by reading the instruction manual. In 'Take cover with covered warrants ', we explain the basic principles of covered warrants, including what they are, how you buy and sell them, and what they let you do. To give you an idea of where they fit into your overall investment toolbox, we then compare them with some of the other leading derivative instruments in 'Covered warrants compared '.

In the two articles that follow, we show how you can use them to make and preserve money whether the markets are going up or down – 'Prosper in falling markets with covered warrants ' and 'Be a bull with covered warrants '. Although they're designed to be user-friendly, some complicated stuff goes into the pricing of covered warrants. Grasping a few of the essential concepts will help you to become a more effective covered-warrants trader – see 'How covered warrants are priced '.

The best way to understand a tool's full potential is to see it in the hands of a master. And covered warrants traders don't come much more masterful than the investors chronicle's very own Simon Thompson. In 'Trade covered warrants like a pro ', Simon shows how he uses these instruments to earn triple-digit returns in double-quick time.

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