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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

This material is made available by Citigroup Global Markets Australia Pty Limited ("Citigroup Global Markets") ABN 64 003 114 832 and AFSL 240992, Participant of the ASX Group. The Financial Products referred to in this document are issued by Citigroup Global Markets. 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 their own independent financial advice based on their own circumstances before making a decision.
The terms set forth herein are intended for discussion purposes only and subject to the final expression of the terms of a transaction as set forth in a definitive agreement and/or confirmation. Although the information contained herein is based upon generally available information and has been obtained from sources believed to be reliable, we do not guarantee its accuracy, and such information may be incomplete or condensed. Any prices used herein are historic and may not be available when any order is entered. All opinions and estimates included in this document constitute our judgment as of this date and are subject to change without notice.

This material does not purport to identify the nature of the specific market or other risks associated with a particular transaction. Before entering into a derivative transaction, you should ensure that you fully understand the terms of the transaction, relevant risk factors, the nature and extent of your risk of loss and the nature of the contractual relationship into which you are entering. You should also carefully evaluate whether the transaction is appropriate for you in light of your experience, objectives, financial resources, and other relevant circumstances and whether you have the operational resources in place to monitor the associated risks and contractual obligations over the term of the transaction.

The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor or agent. Therefore prior to entering into the proposed transaction you should determine, without reliance upon us or our affiliates, the economic risks and merits, as well as the legal, tax and accounting characterizations and consequences of the transaction, and independently determine that you are able to assume these risks. In this regard, by acceptance of these materials, you acknowledge that you have been advised that (a) we are not in the business of providing legal, tax or accounting advice, (b) you understand that there may be legal, tax or accounting risks associated with the transaction, (c) you should receive legal tax and accounting advice from advisors with appropriate expertise to assess relevant risks, and (d) you should apprise senior management in your organization as to the legal, tax and accounting advice (and, if acceptable, risks) associated with this transaction and our disclaimers as to these maters. If you are acting as a financial adviser or agent, you should evaluate these considerations in light of the circumstances applicable to your principal and the scope of your authority. If you believe you need assistance in evaluating and understanding the terms or risks of a particular derivative transaction, you should consult appropriate advisers before entering into the transaction.

We and/or our affiliates (together, the "Firm") may from time to time take proprietary positions and/or make a market in instruments identical or economically related to derivative transactions entered into with you, or may have an investment banking or other commercial relationship with and access to information from the issuer(s) of financial products underlying derivative transactions entered into with you. We may also undertake proprietary activities, including hedging transactions related to the initiation or termination of a derivative transaction with you, that may adversely affect the market price, rate, index or other market factors(s) underlying a derivative transaction entered into with you and consequently the value of the transaction. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding.

© Citigroup 2012. All Rights Reserved. Citi and the Red Arc Device are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world. Any unauthorized use, duplication, redistribution or disclosure is prohibited by law and will result in prosecution.

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