Proceedings of the 6th Economic & Finance Conference, OECD Headquarters, Paris

TRADING STRATEGIES FOR WARRANTS

HANA FLORIANOVÁ

Abstract:

In this paper we examine key strategies for trading warrants which are commonly used by traders on European Stock Exchanges. When trading warrants investor can find himself in three situations - cash extraction, hedging or speculation. For each of them different trading strategy is appropriate. Every strategy has different advantages and disadvantages. Some of them are risky, others are expensive in transaction costs and others need long period of time to perform. For the purpose of this paper we test the convenience of strategies on historical data of real warrants traded on Frankfurt Stock Exchange. We evaluate performance of each strategy and recommend their use for everyday trading.

Keywords: trading strategies, warrants, investing

DOI: 10.20472/EFC.2016.006.006

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