The following terms are used to describe and measure the movement of warrants. Some investors prefer to use certain of the below calculations more than others, you should however have an understanding of all of them before trading.
 
The pricing tools contained on this website will provide each of these ratios for all warrants currently listed in Singapore.

Premium

The amount by which the cost of acquiring the underlying asset by exercising the warrant exceeds the cost of buying the underlying asset directly. This premium is also called ‘time value’ and will decay to equal zero at expiry.

Breakeven price

This is the price level at expiry above (below) which the investor will make a profit in the case of a call (put). Looking at this in another way, it is simply the exercise price plus (less) the premium for a call (put). This calculation excludes transaction costs.

Call  =  (  warrant price  x  conversion ration  )  +  exercise price

Put  =  exercise price  -  (  warrant price  x  conversion ratio  )

Gearing

Indicates the increased number of warrants you can buy with a certain amount of capital as opposed to buying the underlying share. For example a gearing level of 10x means that you will be able to buy 10 times as many units of underlying exposure than you could if you purchased the underlying share. This ratio is not as practical as the two detailed below as it does take into account the responsiveness (delta) of the warrant.

Gearing  =  underlying asset price  /  (  warrant price  x  conversion ratio  )

Delta

A very useful indicator that shows the approximate change in the warrrant for a small change in the underlying stock (or asset). For example, a delta of 60% means that the warrant should move approximately $0.06 for each $0.10 move in the underlying share (or asset).

Delta  =  (  change of warrant price x conversion ratio  )  /  change in underlying asset price

Effective gearing

A similar indicator to ‘delta’ which combines the two above calculations to express the warrant price movement as a percentage. Effective gearing indicates the percentage change in the price of a warrant relative to a one percent change in the underlying.

For example if a warrant has an effective gearing of 10x it means the warrant should move approximately 10% for a 1% movement in the underlying share. A higher effective gearing generally translates to a higher profit potential and also a higher level of risk.

Effective gearing  =  gearing  x  delta

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.