Dow Jones & Nasdaq-100. The first On Bursa Malaysia Warrants

Dow Jones & Nasdaq-100. The first On Bursa Malaysia Warrants

  • February 9, 2022
  • 157

MACQUARIE have launched call and put warrants over the Dow Jones Industrial Average® Index (DJIA) and the NASDAQ-100® Index (NDX), the first such warrants in Malaysia. The warrants are listed on Bursa Malaysia (Bursa) and begin trading on 17 December 2021!

The new DJIA and NDX warrants will track the movement in the relevant futures contracts (currently March 2022 contracts) which trade 23 hours a day, covering the full trading hours of Bursa. The market making hours of these new warrants will be from 9:00AM to 12:29PM, then 2:30PM to 4:43PM. Investors can trade warrants with their existing CDS and trading accounts maintained with their brokers, similar to how they trade shares.

U.S. market continues to rally in 2021

The DJIA is a price-weighted measure of 30 U.S. blue-chip companies, and covers all industries except transportation and utilities, while the NDX includes 100 of the largest U.S. and international non-financial companies listed on the NASDAQ Stock Market, and reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology.

The new warrants over the DJIA and NDX join the existing warrants over the S&P 500 Index (SP500), meaning that there are now warrants over three U.S. indices available on Bursa.

The U.S. market has maintained its bullish momentum for the most part in 2021. The DJIA is up 17.6% year-to-date (YTD) to 35,987.64 as of the close on 16 December 2021. The index started the year strong but declined towards the end of last month, closing at a two-month low of 34,022.04, though it has regained some of its footing in December and is currently 4.1% higher month-to-date (MTD). The DJIA March 2022 futures contracts closed at 35,791 on 16 December 2021. Meanwhile, the NDX is 23.1% higher YTD based on the closing level of 15,863.94 on 16 December 2021. Following a decline in early October, the index recovered to rallied for the rest of October into November, though it has then largely traded rangebound so far in December, losing 1.7% MTD. The NDX March 2022 futures contracts closed at 15,866.75 on 16 December 2021.

Gain exposure to the U.S. market with the new warrants

With the issuance of both call and put warrants, investors with either bullish or bearish views can gain exposure to the U.S. markets. A call warrant moves in line with the underlying, increasing in value as the underlying increases, while a put warrant moves in an opposite direction to the underlying, increasing in value as the underlying decreases, and vice versa. The put warrants also allow investors to hedge their U.S. portfolio against any downside risk in the market. In addition, with warrants being a leveraged product, investors can gain exposure with a smaller capital outlay, and yet will not be subject to any margin calls.

Code Name Type Expiry Exercise Price
0658C1 DJIA-C1 CALL 20 Jun 22 40,000.0000
0658H1 DJIA-H1 PUT 20 Jun 22 30,000.0000
0659C1 NDX-C1 CALL 20 Jun 22 18,500.0000
0659H1 NDX-H1 PUT 20 Jun 22 14,000.0000

 

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