Remisier Joey Choy notes that $SIA(C6L.SI)$ shares’ price structure has improved from a long-term perspective, and has in the shorter term, strengthened noticeably following a fresh breakout above the key $7.20 resistance level
This breakout has effectively turned the $7.20 region into a near-term support zone, with buyers continuing to defend higher levels. At the same time, the 20-day moving average has resumed its upward slope, reflecting improving short-term price strength. Joey believes that this setup favours further upside
Read on for his explanation, as well as a commentary on how one can consider using SIA call warrants to magnify their exposure to SIA shares
*Joey’s view does not represent that of Macquarie’s. No put warrant is available for SIA
TradingView Chart – 23 June 26
Singapore Airlines Limited (SIA) is Singapore’s national carrier and one of the world's leading airline groups, operating both full-service and low-cost carriers through its Singapore Airlines and Scoot brands. The group generates revenue from passenger travel, cargo operations, engineering services, and aviation-related businesses, benefiting from its strong brand reputation, extensive route network, and strategic position as a major aviation hub in Asia.
From a long-term perspective, SIA's price structure has continued to improve, with prices holding above the rising 200-day moving average.This suggests that the broader trend remains constructive, supported by improving market sentiment and continued investor interest in the aviation sector.
The stock has also managed to stay above key longer-term support levels, indicating that buying momentum remains supportive of the overall trend.In the shorter term, momentum has strengthened noticeably following a fresh breakout above the key $7.20 resistance level, which had previously capped price advances on multiple occasions.
This breakout has effectively turned the $7.20 region into a near-term support zone, with buyers continuing to defend higher levels.
At the same time, the 20-day moving average has resumed its upward slope, reflecting improving short-term price strength.
More importantly, a 1GT Bullish signal previously emerged during the earlier consolidation phase, highlighting an area where buyers stepped back into the market as prices stabilised above support.
The subsequent rally following this signal suggests that bullish momentum has been rebuilding steadily along with the broader trend structure.
The stock is now trading at its highest level, and the next major resistance zone is around $8.00.
The successful breakout above $7.20 suggests that previous selling pressure has been absorbed, while the current momentum indicates that buyers remain in control.
As long as prices continue to hold above the $7.20 support region, the setup may favour further upside, with the $8.00 level representing the next key area of interest for investors and traders.
So, how does one take a position in SIA to ride the uptrend further with lower initial capital outlay?
Investors who wish to be exposed to potential short term upside moves in SIA shares can consider using SIA call warrants such as the trending* $SIA MB eCW260930(FNVW.SI)$ to magnify the potential share price return using lesser capital outlay compared to investing in the SIA shares directly and without the risk of margin calls.
*Trending warrants refer to warrants with the tightest spreads and highest liquidity
Macquarie has a tool known as the Simulator Exposure (https://warrants.com.sg/tools/exposuresimulator/FNVW) to help investors estimate their investment and returns with warrants versus the underlying share, as well as the maximum holding period if one were to purchase the warrant.
Exposure Simulator: type in number of shares you would buy to see the equivalent amount of warrant investment in chosen warrant to achieve the same level of stock exposure
Source: Starting positive column on Exposure Simulator tool, https://www.warrants.com.sg/tools/exposuresimulator/FNVW
Using the example of an investor bullish on SIA shares above the support level of $7.20 (i.e. current share price of $7.47) and keen to enter position for further upside to $8 from here, an investor will have to spend $112,050 (before trading costs) if he/she were to buy 15,000 units of SIA shares at $7.47. However, if the same investor were to use trending SIA call warrant FNVW to participate in SIA’s further share price upside, the investor will need only to invest $12,879 to buy ~330,200 units of SIA call warrant FNVW to achieve similar level of exposure.
This is because, FNVW has an effective gearing level of 8.7 times (at the point of using the tool) and will move approximately 8.7 times more than SIA shares, and costs $0.039 per warrant versus SIA’s $7.47 share price on 25 June.
Entering the target exit level of $8 under the “Share price” column under the “Simulated breakeven” section, which is 7.1% higher than the current stock entry price, and moving the number of days the warrant is held to the maximum holding period of 90 days later, you will observe that the warrant will increase by 9.7 times i.e. +69.2% which translates into a projected absolute dollar gain of $8,916 compared to the $7,950 gain if one were to buy 15,000 units of SIA today instead (assuming all pricing factors remain constant).
Exposure Simulator: type in the target exit/profit-taking level and increase the number of days held to simulate the expected returns on the warrant versus holding ST Engineering shares
The reason the warrant has moved more than 8.7 times more is due to the high share price target. The larger the share price upside target, the more gearing warrants will produce.Investors ought to be aware the gearing is a double-edged sword and will produce magnified losses should one’s view on SIA shares be wrong. For example, if SIA shares fell to $7.20 in 90 days, the warrant will produce a 61.5% loss which translates to a $7,926 dollar loss compared to a shareholder’s $4,050 loss.
Exposure Simulator: simulates the losses in the warrants versus shares should the share price head lower
Investors should pay heed to cut losses in the warrants should the shares hit their cut-loss price level to prevent a 100% loss in the warrant at expiry.
Finally, Investors may wish to note that using a SIA call warrant will only allow you to participate in the share price move, and is not equivalent to investing and holding the shares directly.
The sharing on how one can take a position using warrants has been contributed by Macquarie Warrants Singapore who is the issuer of these warrants listed on SGX.
The full article and disclaimers can be found here: https://joeychoy.beehiiv.com/p/sia-is-8-00-the-next-destination
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