Turbo warrant
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The turbo warrant is a stock option with two new features. It has a "low vega", the option price is much less affected by the "implied volatility" of the stock market turbo options can also be highly geared. The strike price of the option is also generally the "barrier", if the stock hits the barrier then the option expires worthless. Variations on turbos include forms where the strike and barrier are not identical; where the barrier is only active at eg close of business but the strike is continually monitored (Smart Turbo) and forms with no fixed maturity (Mini's)
As a comparison: a regular call option (option to purchase) will have a value at expiry when the spot price settles above the strike price.
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[edit] Market
The first turbo warrants appeared in late 2001 ([1]). In Germany buying and selling turbo warrants constitute 50% of all speculative derivatives trading.
[edit] Nordic Growth Market
At the end of February 2005 Societe Generale listed the first 40 turbo warrants on the Nordic Growth Market Nordic Derivatives Exchange. During February 2005 the turbo warrant trading revenue was 31 million kronor, 50% (31/55) of total NGM trading revenue of 55 million kronor.
[edit] Exchanges
Securities exchanges that trade this product.
- Euwax - Stuttgart
- SMART Market - Frankfurt
- Nordic Growth Market Nordic Derivatives Exchange (NGM, NGX)
[edit] See also
- Stock option
- Stock warrant
