When choosing a warrant, we suggest that investors may want to take the following steps into their consideration:

1. TAKE A VIEW ON THE UNDERLYING SHARE OR INDEX: To choose a warrant you should first look at the nature and performance of the underlying shares. This will assist in enabling you to make an informed decision about the anticipated movement of the stock.
2. TIMEFRAME: Your selection will be further narrowed by the time frame of your view. Generally you may try to select a warrant that matches the intended time frame for your trade. Shorter dated warrants will tend to provide more gearing, giving you more bang for your buck. However these warrants will tend to decay at a faster rate. In theory, longer dated warrants tend to be less risky but will require a greater outlay and are generally less responsive.
3. GEARING: Next you may look for a warrant with an appropriate gearing level. The two things to consider are the strength of your view and your appetite for risk. Effective gearing is one of the most useful multiples for this purpose. The higher the multiple, the greater your exposure and the higher your returns or losses will generally be.
4. IMPLIED VOLATILITY: Lastly, you should examine closely the warrant's Implied Volatility.  You should consider it against other similar warrants and against the historical volatility of the underlying share and warrant.  Generally speaking, the higher the Implied Volatility the higher is the relative price of the warrant.

One more important thing to remember. As every warrant issuer has a designated market maker that is responsible for providing liquidity for the warrant. It is important that you choose a warrant issuer that you are confident will provide you with a fair price and sufficient liquidity for you to enter and exit your trades.

Under normal market conditions, investors may consider using this process as a general approach for selecting a warrant. Warrants are a volatile instrument and their variables are constantly changing. If are uncertain about any aspect of investing in warrants should contact your stockbroker or professional advisor prior to investing.

This internet site is produced by Macquarie Capital Securities (Singapore) Pte. Limited (Registration No 198702912C) (“MCSSPL”), holder of a capital markets services licence under the Securities and Futures Act, Chapter 289 of Singapore.  No part of this internet site may be copied, either in whole or in part, or distributed to any other person.  If you are not the intended recipient you must not use or disclose the information in any way.

The information on this internet is directed and available for general circulation 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 herein, 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.  While 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.

Macquarie Bank Limited (ABN 46 008 583 542) (“MBL”) is the Issuer of the Macquarie Warrants (“Warrants”).  References to Macquarie include MBL and MCSSPL.  MBL does not carry on banking business in Singapore.  MBL does not hold a licence under the Banking Act, Chapter 19 of Singapore and therefore is not subject to the supervision of the Monetary Authority of Singapore in respect thereof.  MCSSPL is not an authorised deposit taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia), and MCSSPL's obligations do not represent deposits or other liabilities of MBL.  MBL does not guarantee or otherwise provide assurance in respect of the obligations of MCSSPL. 

Disclosures with respect to the listed companies, if any, mentioned in this document are available at www.macquarie.com/disclosures.