Mere Pass Warrants Hai (I have got warrants issued from company)

Often we come across a term called Warrant .Not the typical Bollywood movie J arrest warrant where in the cop says to the villain mere paas tumhara arrest Warrant hai J but the financial term Warrant

A warrant is the right but not the obligation to buy or sell a certain quantity of an underlying instrument at an agreed-upon price.

For years this instrument has been used by smart promoters to pockets millions. It’s a Double edge money making instrument for promoters to use as per market directions.

Every second person down the street has become an analyst. Many to a certain extent shout their view and express their opinions as to the direction of the market ↑or↓.Thanks to flair for speculation not, many a times we hear anybody saying market will move sideways. If a normal person can say this with such high degree of confidence, I m sure the person who is running the company (Promoters) can say this with high accuracy for his company stock.

Let’s say I am a promoter of the company and I predict the stock prices have reached its peak as per rough estimates. I can use this instrument at my disposal. Sell a major stake at higher prices with an intention to buy back the same stake at the lower prices by the way of issuance of warrants.

The same can also be used when I expect a major growth in business and anticipate a sharp rise in the stock price. All I have to do is issue warrants at lower prices and increase stakes and then sell it at higher prices.

Retail investors should beware of this deadly instrument which can be used by promoters in a falling market or a rising market. The end result remains the same they make $$$$$$$ money Honey!

-Team IVI