The price of the underlying of a warrant divided by the price of the warrant. More specifically, it is the ratio of the share price to the warrant price (multiplied by the conversion ratio, if applicable).

Nominal gearing = share price/ (warrant price × conversion ratio)

For example, if a given stock is trading for $500, while the price of a warrant on the same stock is currently $5, assuming a conversion ratio of 1, then nominal gearing is:

Nominal gearing= 500/ (5 × 1) = 100

The term, also known simply as gearing, is broadly used in the U.K. warrant market, and in other markets such as the Japanese warrant market, based on the U.K. model.