Beware of time decay!
Unlike shares, warrants have an expiry date and therefore a limited life. As time passes, the time value of a warrant decreases and eventually reaches zero when the warrant expires (except in the case of zero-strike call warrants). This is known as “time decay”. That is, it costs money each day to hold the warrant and do nothing with it. It is important that you monitor the warrant’s expiry date and performance. Warrants are intended more for trading purposes.
A warrant may expire before your expectations are realised, making it worthless. Therefore it is essential that you select a warrant that has sufficient time to expiry to match your market expectations.
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