👩🏫When markets swing sharply, many investors retreat to the sidelines. But for professional trader and educator Binni Ong, volatility isn’t something to fear, but rather, a condition to prepare for.
🎙Speaking at MooFest 2025, Binni sat down with the DollarsAndSense Podcast Team to demystify one of the most misunderstood trading instruments in Singapore: warrants. The discussion revealed not only what they are, but also how they can be used to capture opportunities or protect portfolios when markets become unpredictable.
*This podcast is sponsored by Macquarie Warrants Singapore. The speakers’ views do not represent that of Macquarie’s.
The below content is extracted from: https://dollarsandsense.sg/warrants-explained-how-singapore-investors-can-capture-market-moves-without-margin-risk/
Warrants Explained: How Singapore Investors Can Capture Market Moves Without Margin Risk
Warrants allow traders to take a position on either side of the market.
When markets swing sharply, many investors retreat to the sidelines. But for professional trader and educator Binni Ong, volatility isn’t something to fear, but rather, a condition to prepare for.
Speaking at MooFest 2025, Binni sat down with the DollarsAndSense Podcast Team to demystify one of the most misunderstood trading instruments in Singapore: warrants. The discussion revealed not only what they are, but also how they can be used to capture opportunities or protect portfolios when markets become unpredictable.
From Teletext to Trading Algorithms
Binni first started trading as a university student, checking stock prices on Teletext via CRT television screens long before the internet age. “I was 18 then. We didn’t even have computers at home, so I had to go to the library to check prices,” she recalled.
What began as a way to help her mother track Malaysia-listed OTC counters eventually grew into a professional trading career that now spans automated algorithmic systems.
What Exactly Are Derivatives?
“Derivatives are financial instruments derived from an underlying asset, like a stock or an index,” Binni explained. In simple terms, they enable traders to take positions based on price movements without directly owning the underlying asset.
“These are leveraged products, which means you only need a fraction of the full value to participate in the trade,” she added. Because of that, derivatives can amplify both gains and losses, and are often used for short-term positioning or hedging existing portfolios.
Warrants vs Options: Similar, But Not the Same
At first glance, warrants and options appear almost identical. Both offer leveraged exposure, can be used for hedging, and allow investors to express bullish or bearish views through calls and puts.
However, the differences are key:
Cost: Warrants are generally cheaper. Many are priced below 20 cents, and some are even under 2 cents, making them accessible to retail traders.
Margin: Warrants are fully paid products with no margin calls, while options can be traded on margin.
Liquidity: Issuers must appoint a market maker to ensure two-way pricing, allowing investors to buy and sell more easily.
Using Warrants in a Volatile Market
Given the macroeconomic uncertainty of 2025, ranging from tariff disputes to geopolitical risks, Binni believes warrants are especially relevant today.
“Volatility is here to stay,” she said. “For short-term opportunities, such as reacting to a sudden market dip, a put warrant lets you profit from the downside with limited risk.” She cited an example from April 2025: after tariff tensions triggered a sharp drop in the Straits Times Index (STI) from 3,800 to 3,400 in just four days, traders who used put warrants could have captured that move without taking on excessive exposure. More importantly, long-term investors can use warrants for hedging.
“When DBS fell from $46 to $38, I didn’t sell my DBS shares because I wanted to hold them for dividends. But I bought a put warrant to hedge the downside. That’s how you can stay invested yet protected.”
Risks: Leverage Cuts Both Ways
While the low cost and leverage make warrants attractive, they also magnify risks. “If DBS moves up 5%, a warrant might move up 30% to 50%. But if it goes the other way, you can lose the same amount just as quickly,” Binni cautioned.
Warrants also come with expiry dates, typically lasting 6 to 10 months. As expiry nears, the time decay accelerates, meaning your warrant loses value even if the underlying doesn’t move. “You should never hold a warrant till expiry. Use it tactically for short-term events or technical breakouts.”
Comparing Warrants, DLCs, and CFDs
Many investors also hear about other leveraged tools, such as Daily Leverage Certificates (DLCs) and Contracts for Difference (CFDs). Binni explained the main distinctions:
CFDs are margin products—you borrow to trade, incur financing charges, and face margin calls if the market moves against you.
DLCs offer fixed leverage (e.g., 3x, 5x, 7x) and have an airbag mechanism that resets prices if the underlying moves too sharply.
Warrants, meanwhile, provide higher leverage (up to 30x), require full cash payment, and have no financing costs or margin calls.
Liquidity can also differ. During crisis periods, such as the 2009 financial meltdown, CFD traders struggled to exit their positions. “Listed warrants have market makers, so you can still exit. That’s a big plus for liquidity,” she added.
Before You Trade, Learn How Warrants Work
Before trading any derivative, Binni stressed one key point: education. “These are leveraged instruments. You must understand how they work, how they’re priced, and what risks are involved.”
She encourages new traders to tap into SGX Academy sessions and issuer websites like Macquarie Warrants, which offer free educational resources and product lists.
Her final advice: “Volatility is not something to fear if you’re prepared. Learn how to use these instruments, so when markets correct, you won’t just freeze. You’ll know exactly what to do.”
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