1. Why invest in warrants and Callable Bull/Bear Contracts (CBBCs)?

Warrants CBBCs
  • Gearing effect
  • Low entry cost; stamp duty exempted; as straightforward to trade as stocks
  • Maximum loss will be limited to initial investment; No margin calls
  • Apart from positioning for the price movement of the underlying asset, it can also capture the opportunity derived from rising Implied Volatility
  • The price changes follows a simpler set of factors
  • The mandatory call mechanism of CBBCs can potentially limit overnight gap risk

*Turnover of a warrant or CBBC has no direct relationship with the product's price. Investors should not use turnover as the only indicator when choosing a warrant or CBBC.