Are warrants a 'win-lose' game? Does the issuer always take the opposite position to the warrant holder?

No. Warrant issuers usually 'cover' positions created when buying or selling the warrants it has issued by buying and selling the underlying shares or indices.  For example, when an issuer sells a call warrant, it may offset this position by buying the underlying share. With other factors remain unchanged, when the share price increases generally the call warrant price increases, the holder of the warrant may profit from the rise in warrant price and the issuer may profit on the rise in share price.

This is called 'hedging'. The reverse is generally true if the share price goes down: that is, if the issuer is holding shares they too may suffer a loss. Accordingly, if a warrant’s price moves down due to a decline in the share price it does not translate to a direct profit for the issuer as the issuer most likely holds shares which have also declined in value.

<< Back to Frequently Asked Questions

While Macquarie Capital Securities (Singapore) Pte Limited ("MCSSPL") provides the information in good faith and derived from sources believed to be reliable, MCSSPL does not represent or warrant the completeness, reliability, accuracy, timeliness or fitness for any purpose of any of the material and it accepts no responsibility for the accuracy, completeness or timeliness of the information.

This internet site is produced by 'Macquarie Warrants Singapore - Macquarie Capital Securities (Singapore) Pte Limited (Registration No 198702912C)', holder of a capital markets services licence under the Securities and Futures Act, Chapter 289 of Singapore. The information on this internet site is directed and available to residents of Singapore only and is not provided to any person who is a resident of the United States or any other country. Any material provided on this internet site, including any indicative terms are provided for information purposes only and do not constitute an offer, a solicitation of an offer, or any advice or recommendation to conclude any transaction (whether on the indicative terms or otherwise). We recommend you obtain financial, legal and taxation advice before making any financial investment decision. The price of warrants may go down as well as up and there is a risk that an investor may lose some or all their investments. Past performance is not indicative of future performance.

Please visit the following webpage: Company Disclosures for disclosure of corporate finance relationship with the Macquarie Group.