Warrant jargon buster

Call

The right to buy an underlying asset

Exercise price or strike price

The price at which you have the right to buy or sell an underlying asset.

Expiry date

The date the right to buy or sell the underlying asset ends.

In the money

When the underlying asset price (eg share price or index) is above the call exercise price or below the put exercise price ie the warrant has some intrinsic value.

Out of the money

When the underlying asset price (eg share price or index) is below the call exercise price or above the put exercise price. ie the warrant has no intrinsic value.

Put

The right to sell an underlying asset.

Time Decay

This term is used to describe how the value of a warrant falls as it nears its expiry date. The rate of time decay rises as the expiry date nears.