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Equity Warrants / Subscription Share Calculation Toolkit.

Warrants are but one financial instrument that regularly comes in and out of fashion. At the moment, they are largely out of fashion, but this does not make them any less worthwhile. In fact, going against the fashions and trends can sometimes be a positive and rewarding step. 
It was once widely expected that the market would mature and the number of warrants in circulation would accelerate at a regular pace. However, this has not happened, and one rarely hears about warrants today, except for occasional articles in magazine such as Investors Chronicle.
Many people hold warrants which were issued as a ‘freebie’ with new share issues, and have forgotten all about them, and may never sell or exercise them. However, it is fair to say that warrants still do present opportunities to small investors who have done their sums and underlying research, and genuinely understand the risks involved when investing in warrants. Unlike larger liquid securities, where the influence of small investors upon the market is usually negligible, warrants (which are generally under-researched and under-traded) can still provide investors with the potential for larger gains than they could achieve by investing in the underlying share.
This page is not about the ins-and-outs of warrants as an investment medium, or a general endorsement of warrants. If you know little about warrants, then we suggest that you look at other sites that already contain the necessary technical explanations of how to undertake the mathematical analysis of equity warrants. Also, this page is solely about equity warrants, not covered warrants (these are more akin to traded options than traditional equity warrants. There is also ample information available elsewhere about covered warrants).
Also, try and get hold of a copy of Andrew McHatties’ book entitled “The Investors Guide to Warrants”. Even though this was first published about twenty years ago, the technical explanations contained within this book are still extremely relevant and understandable, even though (unsurprisingly) many of the Warrants and Investment Trusts listed and given as examples no longer exist (or have merged into other entities).
It is a fact that warrants tend to perform better in Bull Markets (due to the gearing effect) and perform poorly in Bear Markets (the gearing factor often magnifies the falls in the underlying share). While you can find exceptions to the rule in any market conditions, many people view trading in warrants as a cyclical activity.
If we can impart just one useful piece of advice, this is to NEVER trade in any warrants without doing your homework. Therefore, it is not surprising that it is a regulatory requirement that if you have never bought warrants before, your broker will ask you to sign a Risk Declaration Warning to confirm that you are aware of the additional risks that you are undertaking before they will allow you to buy any warrants. Buying a warrant just because you like the issuing Company or Investment Trust does not necessarily mean that Warrant is good value. Buying for such reasons is merely dabbling, and could cause you to make expensive mistakes and give you a negative view of warrants.

Warrant / Subscription Share Calculation Toolkit

This calculation tool will work out all the major ratios that are useful when analysing equity warrants. The details you need to input are:
  • The current trading price of the underlying share.
  • The current trading price of the warrant / subscription share.
  • The exercise price of the warrant.
  • The exercise date of the warrant.
Because warrants trade independently from the underlying shares, the price of warrants can sometimes go up and down for often inexplicable or hard to discover reasons.
The ratios and measurements calculated are useful in filtering out warrants that appear to be overvalued, and allows you to research further those warrants that on the surface appear to offer good value. Each individual ratio has little meaning alone, but a combination of several ratios together can often highlight potential targets. A good combination of indicators could be:
  • Low Capital Fulcrum Point
  • Low Breakeven Rate
  • High Gearing
  • Long (or reasonable) term to expiry (usually three years or more).
Other combinations of indicators may be used for different purposes. Of course, if you were looking to do some serious trading with some serious money, it would be to your advantage to undertake some even more exhaustive mathematical analysis (such as option pricing models, and overall market analysis) that is going beyond the bounds of this page and this spreadsheet.
However, once you have identified some warrants that appear to offer good value, it helps to do further research, such as:
  • Is the underlying share on a rising trend, or has good growth prospects?
  • Check out the conversion terms of the warrants, to see if there are any restrictions (although you may have no intention of ever exercising the warrant).
  • What are the recent trading volumes of the warrants? Beware of warrants that are traded very infrequently.
  • NEVER be tempted to buy a warrant just because it is cheap. If it is trading at a few pence, it could be because it is inherently worthless or “out-of-the-money”.
  • Beware of large spreads. Many of the smaller and more obscure warrants display large differences in the Bid and Ask prices which can make trading in these instruments ultimately unprofitable.
  • If you have never bought warrants before, construct a Fantasy Portfolio (you can do this on Yahoo Finance) and monitor it for 6 to 12 months before you start doing it for real.
This spreadsheet always you to update the prices of the warrants and underlying shares in real-time. Click on the UPDATE button to retrieve the latest prices from the Internet. If any lines are highlighted in red, it indicates that there is insufficient information to perform the calculation (such as expiry dates, exercise price, etc).
This spreadsheet contains a substantial number of known warrants currently trading on the London Stock Market (and AIM), but we make no claim that this is an exhaustive list.
Likewise, discovering the expiry dates and strike prices of smaller less-liquid warrants can be a laborious task, and this spreadsheet is by no means complete. Information can often be obscure or contradictory. Therefore, if you are able to fill in any of the gaps in this spreadsheet or notice any inaccuracies, please contact us with the details so that we can update it.
Please Note: The Warrant Analysis spreadsheet, which can still be downloaded from the link below, is now largely out of date, and thus has been replaced by the calculation tool. However, it is still available for those who wish to use or modify it to their own requirements.
We take no responsibility for the usage of the Calculation Tool or this spreadsheet. The use made of this analysis depends upon individual interpretation, and does not constitute financial advice, or any recommendation to buy warrants.
You may freely modify, re-distribute or make this spreadsheet available for download without requesting permission. All we ask is that if you make any beneficial changes to this spreadsheet, please send a copy to in order to allow everyone to benefit from the enhancements.
Notice: Use this spreadsheet at your own risk, and please do your homework!
December 2012 update: This spreadsheet his been updated to take into account that fact that lots of warrants have now expired and have gone out of circulation. In fact the market in tradeable warrants has seemed to have hit a low point. Generally, of those that are currently in circulation, most are subscription shares linked to investment trusts. In many ways they are like warrants, yet have subtle differences. Some are effectively open-ended and have multiple redemption dates with different redemption prices at different dates. For instance, you may be able to redeem them in 2014 or 2016, but the redemption price is adjusted at each date. Effectively you need to do a bit of digging (i.e. read the prospectus) and adjust the figures accordingly. That said, there are probably still some bargains out there!


The figures projected by the calculator are only for guidance purposes - whilst we aim to ensure the accuracy of our calculators, we can take no responsibility for the usage made of them.

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