Wave and knockout warrants follow an index and work differently than normal vanilla warrants i.e. equity warrants. Two issuers in the market provide these products: Standard Bank and Deutsche Bank.
You can identify a Standard Bank Knockout! Warrant
thus: TOPSK (Then a letter of the
alphabet from A to O for call and from P to Z for put) e.g. TOPSKA.
You can identify a Deutsche Bank warrant
thus: TOPDW (Then a letter of the
alphabet from A to O for call and from P to Z for put)
These warrants have a knockout level. Should
the indices reach that level, you are “knocked out” of your position and you
lose everything you put into the
The closer these warrants get to the knock-out
level, the higher geared they become and the bigger the risk in trading them.
You can go long or short with them. If you
buy a long contract, you are not expecting the contract to go below the strike
level. If it does, you lose everything. If it goes up, you should be making
If you buy a short contract, it implies
that you do not expect the contract to go above the strike level. If it does, you
lose everything. If it goes down, you should be making money.