Turbo Warrants are a new type of warrant listed on the ASX, comprising barrier style call and put warrants over a variety of shares and indicies. These warrants have a knock-out Barrier level which is set at the same price as the exercise price of the Turbo Warrant. If the underlying share or index touches the Barrier level at any time during the term of the warrant, the barrier is triggered and the Turbo Warrant will be terminated with no payment made to holders. Turbo Warrants provide a cheaper alternative to gain exposure to share price movements.
Benefits of Turbo Warrants;
Highly Leveraged - Approximately Delta 1 offering the potential for greater returns than you may get from other Equity or Index warrants
Liquid - Macquarie as the issuer will provide buy and sell quotations in line with the underlying stock or indicies
Minimal Time Decay – as these warrants are deep in the money, time decay is minimal.
ASX Listed – can be traded easily through your Broker or Online Service provider
Calls and Puts Available – provide the ability to trade both a bullish or bearish view over the underlying stock or indicies. Macquarie Turbo Warrants are European style warrants
Limited Loss – amount an investor can lose is limited to the purchase price paid.
Product profile
Underlying instruments
Shares and indicies
Risk profile
Higher with knock out feature
Time frame
Shorter term
Uses
Trading
Who Do Turbo Warrants Suit?
Investors looking for greater leverage and higher risk than ordinary shares or other warrants
Investors who understand the additional risks associated with the barrier feature
Those looking for an alternative to other forms of gearing into shares
Investors who have had previous experience with warrants and options
How do Turbo Warrants Work?
The Exercise Price of the Macquarie Turbo Warrants is also the Barrier level for the warrant. If at any time during the life of the warrant, the market price of the underlying share touches the Barrier Trigger Level, the Barrier feature will be triggered and the warrant will terminate with no payment to holders. In the case of a Turbo Call Warrant the underlying share price would need to be at or below the Barrier level to be triggered. For a Turbo Put Warrant the underlying share price would need to be at or above the Barrier level to be triggered.
Effect of Dividends on Turbo Warrants
Another important feature of Turbo Warrants is the effect of dividends on the exercise price. If a dividend (other than a Special Dividend) is announced by the underlying company, the exercise price and barrier level will be reduced by the dividend amount. This adjustment will take effect on the ex-dividend date in respect of the underlying shares comprised in the underlying. (Please refer to the Product Disclosure Statement for treatment of Special Dividends)
What Happens at Maturity?
If the Barrier Level is not triggered during the life of the Turbo Call Warrant, an investor has the ability to exercise the warrant and receive the underlying shares in exchange for the exercise price.
If the Barrier Level is not triggered during the life of the Turbo Put Warrant, an investor has the ability to exercise the warrant and deliver the underlying shares to Macquarie in exchange for the exercise price.
Holders also have the option to sell the warrants on market at any time.
Are There any Risks?
Turbo Warrants have similar risks to other Equity Trading Warrants.
The significant additional risk is that if the Barrier Level is triggered and the Turbo Warrant is terminated, the investor will not be able to sell the Turbo Warrant and will not be entitled to any payment. The investor will therefore need to monitor carefully the relevant market price of the underlying share or index.
Investors must read the Product Disclosure Statement and understand the terms & conditions and risks involved in investing in Turbo Warrants before making any investment decision.
Maquarie "Turbo" Barrier Warrants are offered by Macquarie Bank Limited (ABN 46 008 583 542). Applications may only be made on receipt of the Application Form attached to the Product Disclosure Statement (PDS) dated 19 March 2004. Copies of the PDS may be obtained free of charge from Macquarie Bank on the above contact points. Macquarie Bank has not taken account of your objectives, financial situation or needs. We recommend you obtain financial , legal and taxation advice before making any financial investment decision. Macquarie will receive remuneration from the issue of Barrier Warrants.
Where we provide any advice on this webpage, it has been prepared by Macquarie Bank Limited ABN 46 008 583 542 (Macquarie) without considering your objectives, financial situation or needs. Before acting on any advice on this webpage, you should consider its appropriateness to your circumstances and, if a current offer document is available, read the offer document before acquiring products named on this webpage.
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