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🎓 Macquarie Warrants 101 – What I Learned After Receiving a S$20 Seminar Voucher

Congratulations on receiving the S$20 Macquarie Stock Cash Voucher after attending the seminar! It is a nice way to encourage participants to learn about structured warrants before trading.

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🌟 Some Popular Macquarie Warrants

Macquarie issues warrants on many well-known stocks and indices. Popular examples include:

* Alibaba – Call and Put Warrants (e.g. JCJW Put)

* BYD – Call and Put Warrants (e.g. OPCW Call)

* Hang Seng Index (HSI) – Call and Put Warrants

* Nasdaq-100 – Call Warrants (e.g. EFKW)

* Nikkei 225 – Call and Put Warrants (e.g. YHSW)

* Meituan

* Tencent

* Xiaomi

* Bilibili

These are among the more actively followed Macquarie warrants on SGX.

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📈 How Do Call Warrants Work?

A Call Warrant is generally used when you expect the underlying stock or index to rise.

Example

Suppose Alibaba is trading at HK$120.

You buy an Alibaba Call Warrant.

If Alibaba rises to HK$130, the warrant may increase in value.

You can:

✅ Sell the warrant before expiry and realise a profit if the market price has increased.

Or…

Hold it until expiry if it finishes in the money.

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📉 How Do Put Warrants Work?

A Put Warrant is generally used when you expect the underlying asset to fall.

Example:

Suppose BYD is trading at HK$120.

You buy a Put Warrant.

If BYD falls to HK$105,

the Put Warrant may increase in value.

Again,

you can either sell it before expiry or hold it until expiry.

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🇪🇺 What Does European Style Mean?

Macquarie structured warrants listed on SGX are generally European-style warrants.

This means:

❌ You cannot exercise them before expiry.

Instead,

they are automatically assessed at expiry.

If the warrant finishes in the money, the issuer automatically cash settles it according to the warrant’s terms. If it expires out of the money, it expires worthless.

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💵 Cash Settlement

Unlike buying shares,

you normally do not receive the underlying stock.

Instead,

Macquarie calculates the settlement amount based on:

* Final settlement price

* Strike price

* Conversion ratio

If the calculated settlement amount is positive, the cash is credited to your account. According to Macquarie’s FAQ, settlement is generally made within 5 business days after expiry, subject to applicable handling fees.

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🧮 Example

Imagine a Call Warrant with:

Strike Price = HK$100

Settlement Price = HK$108

Conversion Ratio = 10 : 1

Difference

HK$108 − HK$100 = HK$8

Cash settlement

HK$8 ÷ 10 = HK$0.80 per warrant

If you own 10,000 warrants

You would receive:

10,000 × HK$0.80

= HK$8,000

(before any applicable fees and based on the warrant terms).

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⚠️ Maximum Loss

One feature of buying warrants is that your maximum loss is generally limited to the amount you paid for the warrants plus transaction costs.

You cannot lose more than the purchase price of the warrant itself simply because the underlying stock moves against you.

However,

the warrant can still lose 100% of its value if it expires worthless.

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📅 Before Expiry

Many traders do not hold until expiry.

Instead,

they buy and sell the warrant during market hours,

just like trading a normal SGX-listed security.

This allows them to lock in gains or limit losses before the warrant expires. Macquarie notes that investors can trade warrants on SGX up until the last trading day, which is generally five trading days before expiry.

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🔍 Things I Always Check

Before buying a warrant, I look at:

✅ Underlying stock or index

✅ Call or Put

✅ Strike price

✅ Expiry date

✅ Conversion ratio

✅ Effective gearing

✅ Bid-ask spread

✅ Liquidity

These factors help me understand how the warrant is designed and how it may respond to changes in the underlying asset.

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❤️ Final Thoughts

Receiving a S$20 Macquarie seminar voucher is a good opportunity to explore how structured warrants work before committing larger amounts of money.

Warrants can provide leveraged exposure to markets, but they also carry higher risk because they have an expiry date and can become worthless. Learning concepts such as European-style exercise, cash settlement, conversion ratios, and effective gearing can help investors better understand these products before deciding whether they suit their objectives.

Educational Disclaimer: This article is for educational purposes only and is not financial advice or a recommendation to buy or sell any warrant. Structured warrants are leveraged products and involve significant risk, including the possible loss of the full amount invested.

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