Will 2013 be the year that Covered warrants finally take off in the UK retail market?

[Torch]

I think maybe 'yes'

In the ongoing dead parrot financial climate it's hard to ignore the logical appeal of a product with the innate limited risk/unlimited upside appeal of buying call/put options (but designed for the retail market)

Time for SG to get back on their double decker battle-bus and tour the country again spreading the word.
Those were the days. Even the kid I saw urinating against the tyres of the bus was doing so with love for Covered warrants

I do hate it though when they issue calls and no puts (e.g. this last week on Blackberry)
It just smacks of 'the house' forcing a position on 'the punter'.

BUT... with a bit of tweaking/tidying up, a few bad suits and a bus with a megaphone, I seriously think CWs could finally make an impression on the UK this year

Any thoughts welcomed

 

[BobbyBB]

Sadly I think no for these 2 reasons -

1. Options have never really taken off in the UK. Look at the market cap of some of the really big FTSE companies and then look at their respective option volume. Basically it's pathetic. So if options haven't taken off in 20 years, covered warrants are unlikely to.

2. Covered warrants are big time on the continent for one main reason - they're activly used/packaged up by the investment companies and sold to the retail market (for probably overpriced prices!). Therefore retail doesn't have to know much about them in order to buy them as they're being 'advised' by 'professionals'.

The other problem probably has to do with the price they're traded at. Anyone these days that trusts an investment bank to have their best interests at heart is should be committed. I would therefore expect, and I think I read something about this some years back, that all the warrants they sell are overpriced and are designed to shift risk to the client. I could be wrong on this point though.