Agree with Cerhob concerning OTM short term expiry warrants. Warrants are like any financial product, there is a time when you should be in and a time when you should be out.
The 1st question you must ask yourself is;
'Are warrants the financial product to be in given current market conditions?' Remember for different market conditions there are different financial products.To play the same product across different market conditions I think is a fundamental strategy mistake a lot of people fall into. For a bull market the answer is 'YES' For a bear market the answer is 'YES' (if you have no problems on the short side.) What about a bear market being held hostage to bear rallies caused by liquidity? Well the volatility is there which points to warrants but short term direction uncertainity is high which points to other strategies. Only experts in this market and / or with a very small percentage of your portfolio.
The 2nd question you must ask yourself is;
'what type of warrants?' (I assume we are ignoring instalments) I think you must play warrants near the money with at least 3 months till expiry. To play anything else in a market of such short term volatility to me is just gambling.
The 3rd question you must ask yourself;
'is it within my psychological make up to execute a consistent stop loss policy?' If the answer is no this makes warrants quite simple, don't play them.
