| Comparison Guide |
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| Volatility vs. Time to Expiry |
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The volatility vs. time to expiry graph shows the tradeoff between having more days to expiry and higher implied volatility.
The higher the implied volatility means the more you need to pay for the warrant.
Generally, warrants with more time to expiry and lower implied volatility are more desirable compared to warrants that are near to expiry and have higher implied volatility. |
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| Remember: |
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Buying a warrant with more time to expiry would cost more and may not be suitable for short term traders. Buy only as much time to expiry as needed. |
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Buying warrants with 30 days to expiry or less is not advisable as the warrant would lose value quickly due to time decay. |
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| Look for a warrant with: |
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Implied volatility below the underlying's historical volatility (horizontal line) OR
Implied volatility below peers.
Remaining days to expiry matching investor's time horizon. |
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Warrants Basics
