Financial leverage

In the securities markets, financial leverage refers to small amounts of money being used to make an investment that behaves like another investment with a much larger volume. For example, this is what happens when you purchase options or warrants: by paying a small amount (premium), investors can potentially obtain the same result as if they had bought or sold securities with a much higher market volume. Until the option expires, the investor can obtain a return on the money that has not yet been paid out to purchase securities. Therefore, investing in warrants can be much more profitable than investing in the underlying asset if the markets evolve favorably. However, in return, there is an increased risk and the possibility of losing the entire investment if the market does not evolve as expected.