Wave and knockout warrants follow an index and work differently than normal vanilla warrants i.e. equity warrants. Two issuers in the market provide these products: Standard Bank and Deutsche Bank.
You can identify a Standard Bank Knockout! Warrant thus: TOPSK (Then a letter of the alphabet from A to O for call and from P to Z for put) e.g. TOPSKA.
You can identify a Deutsche Bank warrant thus: TOPDW (Then a letter of the alphabet from A to O for call and from P to Z for put) eg TOPDWA.
These warrants have a knockout level. Should the indices reach that level, you are “knocked out” of your position and you lose everything you put into the trade.
The closer these warrants get to the knock-out level, the higher geared they become and the bigger the risk in trading them.
You can go long or short with them. If you buy a long contract, you are not expecting the contract to go below the strike level. If it does, you lose everything. If it goes up, you should be making money.
If you buy a short contract, it implies that you do not expect the contract to go above the strike level. If it does, you lose everything. If it goes down, you should be making money.