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ADVFN HomeHelpCovered WarrantsCovered Warrants by Alpesh PatelTax management
Covered Warrants by Alpesh Patel
  So how am I going to use them?
  Pick the right risk/reward profile
  Intrinsic Value
  Time value
  Relationship between the warrant price and the price of the underlying security
  Who is it for?
  Technicalities
  Other strategies
  Tax management
  Freeing Cash
  Conclusion
  What are they?

Tax management

Another use of warrants is in managing your tax affairs. Oh dear. Whilst that is switch-off time for many, it can be worth the effort to stay awake.

If you have a capital loss on a share you could crystalise that by selling the stock to offset capital gains elsewhere and buy the call warrant to maintain exposure to the stock.

Other essentials the tax inclined should know: profits on warrants will be charged as capital gains not income. For longer term holders taper relief would be available. There is no stamp duty. They can't be part of an ISA, but can be part of a SIPP. Visit www.inlandrevenue.gov to find out more about more.





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