Frequently Asked Questions

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What is a warrant?

Warrants are securitised options. Warrants can be traded on stock Exchanges which is much cheaper than the trading on Derivative Exchanges, where options are traded.

An option can be written by anyone, the warrant can only be issued by a financial institution, like Citigroup. An option can be uncovered while the Citigroup Warrants are covered. Citigroup is market maker for Citigroup Warrants.

What are the different types of warrants?

There are many different types available, however, the most common are:
a) Trading warrants (put/call warrants) over a single stock, index currency, or interest rate.
b) Warrants over a basket of stocks.
c) Instalment warrants.
d) Endowment warrants.
e) Barrier warrants.
f) Capital plus warrants.
g) High-yield notes or BLOCS.

What is the underlying?

The underlying of a warrant is a financial asset, for instance a stock, a basket of stocks, a stock exchange index, a treasury bond, or an exchange rate. It could also be a material good such as petroleum, gold, coffee, etc...

What is a Call?

A call option is the right to buy an underlying at a predetermined price.

What is a Put?

A put option is the right to sell an underlying at a predetermined price.

What is the difference between a basket and an index?

Baskets and indexes are covering several stocks. Normally baskets cover 5 to 10 stocks of an industry. These stocks meet with certain criteria (Telecom, Banks, etc..). An index is composed by a variety of stocks of different sectors of a domestic market.

What are the key principles to using warrants?

Warrants are derivatives and, as such, are highly speculative. On one hand, thanks to the leverage effect, they offer potentially much higher returns than a direct investment in the underlying. On the other hand they can, when market conditions are different than expected, lead to equally high losses and, in the worst-case scenario, result in the loss of your entire investment.

It is advisable, then, never to invest an amount of money that you are not prepared to lose.

Disclaimer

The Financial Products referred to on this page are issued by Citigroup Global Markets Australia Pty Limited (ABN 64 003 114 832 and AFSL No. 240992, a Participant of the ASX Group and a Participant of the Sydney Futures Exchange Limited. This Site is provided for information purposes only and is not an offer, solicitation, recommendation or advice to buy or sell CitiWarrants^®. While the information is based on sources believed to be reliable, we do not guarantee its accuracy and it may be incomplete or out of date. For complete and accurate information on CitiWarrants, refer to the relevant Product Disclosure Statement on this Site. Prices quoted may differ from the actual prices at which an investor may buy or sell a Warrant. Warrants can be traded on ASX and investors can obtain a copy of the Product Disclosure Statement by contacting a Citigroup Wealth Advisor Financial Consultant or the CitiWarrants Hotline on 1300 30 70 70. Investors may also apply for CitiWarrants under the Product Disclosure Statement. Warrants are not bank deposits or obligations of, or guaranteed by, Citibank, N.A., Citibank Pty Limited or any of its affiliates or subsidiaries and are subject to investment risks, including the possible loss of the principal amount invested. This information does not take into account the investment objectives or financial situation of any particular person. Investors should be aware that there are risks of investing and that prices both rise and fall. Investors should seek advice from a Financial Consultant based on their own circumstances before making a decision. Citigroup and the Umbrella Device logo are service marks of Citigroup Inc. or its affiliates used and registered throughout the world. © 2006 Citigroup Global Markets.

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