Why so many people trade warrants?
Trading of warrants is an unfair game despite the implied volatility and effective gearing. When the market price of the underlying stock moves in favour of the warrant,the price of the warrant may not rise but if the price of the underlying stock moves in disfavour of the warrant, the price of the warrant is sure to fall. Of 10 traders, 9 are losers and only 1 is winner. Why do many small speculators like trading warrants more than stocks aware of the high risk and unfairness?
Thank hand7321 for immediate reply pointing out 1 good reason. But trading warrants can end up in nothing (after the expiration) unlike trading stocks which have a scrap value and always offer a chance to wait for recovery. Maybe trading warrants most suits gamblers who want to win more with less.
- 1 decade agoFavorite Answer
Because many people belongs to hurry people
they want short time to earn more money(fast money) but they always hav not enough money to buy real stock,then buy warrants lor