The Art Of Picking A Structured Warrant In Malaysia Stock Market

According to Bursa Malaysia, Structured Warrants are proprietary instruments issued by a third-party issuer, namely an eligible broker or financial institution that give holders the right, but not the obligation, to buy or sell the underlying instrument in the future for a fixed price.

In Malaysia, the common third-party issuers include Macquarie Capital, Maybank Investment Bank, Kenanga Investment Bank, Affin Hwang Investment Bank, RHB Investment Bank, and others.

In order to increase the chance to make a profit from Structured Warrant of an individual stock like Affin, Gamuda or IHH, an investor can follow this sequence below :

1. Pick an Uptrend sector

2. Pick an Uptrend stock in that Uptrend sector

3. Choose a structured warrant with Maturity Date which is at least 4-5 months away from today.

4. Choose an Exercise Value which is not Unfavorably far away from current stock price, preferably within 3% range.

E.g.

1. Pick the Consumer sector 

2. Pick FFB (Farm Fresh Bhd)

3. Choose FFB-C8 (a Call Warrant) with Maturity Date 27 Mar 2025 (5 months away from Oct 2024)

4. Exercise Value RM1.80 vs current price RM1.81 (as of 2 Oct 2024)

Note A : By the Maturity Date, if the Structured Warrant can’t meet the Exercise Value, then the return becomes ZERO.

Note B : Buy a Call Structured Warrant for an Uptrend stock (Call Structured Warrants constitute about 90% of total structured warrants in circulation)

Note C : Buy a Put Structured Warrant for a Downtrend stock, e.g. YTL-HE and YTLPowr-HF, even though there are not many put structured warrant in the market.