Warrants are derivatives that give you exposure to an underlying asset (like a share or currency) at a fraction of its cost. They leverage your exposure to an asset - so they increase risk - but also give you the potential for higher returns. Macquarie offers a range of warrants to suit your investment or trading needs.
Trading Warrants
Trading Warrants are similar to options contracts, except that they are typically issued by an investment bank like Macquarie Bank (the issuer) and are traded on the ASX, like shares. The issuer of the Warrant determines the structure and terms of each particular Warrant issue.
Trading Warrants are popular with traders who want to speculate on the future direction of an underlying asset. This view can be positive or negative, as different types of Warrants enable traders to benefit from either a rise or fall in the value of the underlying asset. Generally, call Warrants increase in price as the underlying asset appreciates, while a fall in the underlying asset price will generally cause an increase in the value of a put Warrant.
The underlying assets over which trading Warrants are available include:
Equity Warrants – shares ranging from blue chips like Telstra, BHP or Commonwealth Bank to the more speculative, smaller market cap stocks
Index Warrants – the S&P/ASX200 index covering the leading 200 shares on the ASX.
Trading Warrants were first listed on the ASX in 1991 by Macquarie Bank. Since then their popularity has increased dramatically. In fact, over $5 billion worth of trading Warrants, representing almost 4.5 billion Warrants, were traded on the ASX in 2006.
