Trader generates return of 140% and takes home monthly prize

Macquarie is pleased to announce the first monthly winners for the WarrantHero contest, with the leaders taking home cash prizes of up to $2,500 each. The winners of the Warrant Hero contest are decided based on returns generated in a simulated warrant trading environment mirroring the actual live market. Top monthly trader Mr Yau Teng Yan realised trading returns of more than 140 per cent in one of his warrants by taking a position in HSI puts as the markets fell. Runners up Rinson Keat and Aaron Bay were also bearish, profiting from jumps in put warrant prices over the past three weeks.

The top weekly traders from last week were also bearish, generating their returns by buying put warrants over regional indices and local banks. Global markets have been in decline over recent weeks as the US weighs its option over Syria and the future direction for Quantitative Easing (QE) remains uncertain.

Top monthly trader make gains in HSI puts

Trader Yau Teng Yan was the top performer for the first month of the WarrantHero contest with his biggest gain coming from a position on a Hang Seng (HSI) put warrant. Teng Yan bought the short dated HSI put HSI21600 MBePW130829 (SA4W) on 19 August, giving him a return of 140 per cent when the HSI futures lost 580 points, or 2.6 per cent. Teng Yan closed his position at 4pm on 20 August, realizing his profits.At the same time, Teng Yan also bought another put warrant HSI22000 MBePW130927 (SO9W) on 19 August. The warrants gained value as the Hang Seng futures declined more than 2.6 per cent over the next five trading days. Teng Yan decided to take profit on his SO9W warrants in batches, giving him a 42.7 per cent return on this particular trade.

With a bearish view on the Hang Seng futures, Teng Yan entered into his third trade on the Hang Seng put warrant HSI21200 MBePW131030 (SV1W) on 21 August. However the Hang Seng futures went against Teng Yan’s direction in the next two trading days. Teng Yan subsequently decided to close off this position on 23 August, with a loss of 14.3 per cent. The underlying Hang Seng futures gained 0.9 per cent within these two days.

With the three trades that Teng Yan made on WarrantHero contest, he realised a total return of 69.1 per cent on his investment for August, earning him the top cash prize in the contest.

“I was very bearish so I traded only the HSI puts. I’ve learnt that if you have a strong view on where the market is going, warrants are a good way to profit from that,” says Teng Yan, a medical officer who has had prior experience trading warrants in the real world but took a hiatus after incurring losses. He thus joined the WarrantHero contest with the intention to hone his warrant trading skills before re-entering the real market again. Teng Yan now has other WarrantHero users who are paying him a nominal fee every month to “follow” his trades on the app. He believes that “WarantHero, with its live pricing is a good way for people to get started on trading warrants.”

First runner up bearish on Capitaland

One person who used the contest to learn more about warrants was the first runner-up Rinson Keat. Rinson, a 25 year old who works in the uniformed services, is relatively new to investing in equity markets. WarrantHero gave him his first introduction to warrants, which he had no knowledge of prior to the game. Now, he likes the instrument for the fact that “it can go up a lot and make you a lot of money when your view is right.”

With a bearish view over local property developer, CapitaLand, Rinson chose the short dated put warrant CapitalaMBePW130903 (R5TW). He entered the position on 16 August, when CapitaLand gapped down to open at $3.19. Rinson has yet to close off his position on the put warrants, giving him an unrealised profit of 55 per cent as of Friday’s close. The underlying security, Capitaland slid 4.7 per cent over the corresponding period.

Besides trading CapitaLand puts on 16 August, Rinson also made two other trades on Keppel Corporation put warrant KepCorp MBePW131101 (SH9W). This position gave Rinson a return of more than 6.6 per cent after the company lost 1.8 per cent over the next two weeks.

With an overall return on investment of more than 46 per cent, Rinson is the first runner up for the WarrantHero contest in August, a decent set of results for someone who is just starting to pick up trading in the real world.

Second runner-up an index trader who trades a mix of HSI and Nikkei

The second runner-up Aaron Bay, is a 26-year old Management Associate at an offshore and marine company who ranked top 10 in a previous Macquarie warrant competition and has managed to repeat his feat in this contest.

He closely monitors index futures in the real world and is a HSI warrant investor. His winning trades in the contest were invariably HSI put warrants, where he managed to profit from the fall in the HSI futures. He entered his HSI22000 MBePW130927 (SO9W) position on 13 August before the HSI futures declined. He held the position over a period of over two weeks, realizing his profits last Wednesday. The put warrants gave Aaron a total return of 46 per cent over his two week holding period.

After closing out the winning trade in the HSI puts, Aaron bought into a longer dated HSI put, however the market did not move in his favour and he was quick to square his position. Similarly he took a bullish position on the Japanese market, buying Nikkei call warrant NKY 11000 MBeCW130913 (S9SW). The Nikkei 225 futures climbed steadily after Aaron entered the position, before it retraced shortly after. Aaron then closed off his position at his same entry price. A good lesson here for budding traders, always have stop losses be quick to close out trades if your initial view turns out to be wrong!

Weekly winners bought puts on HSI, UOB and DBS

Not just a monthly winner, Aaron was also the weekly winner last week, earning a weekly return of more than 28 per cent on his position over as the futures declined approximately 391 points, or 1.8 per cent over the week. Runner up Aikobanana also bought into HSI puts, buying HSI21400 MBePW130927 (SO8W) last Monday before the Hang Seng futures started their decline. Aikobanana held an unrealised profit of 23.4 per cent based on the closing price on last Friday, 30 August. Aikobanana has yet to close off his position in the puts.

Trader SuperBear, just as the name suggests, had a bearish view over the banking stocks in Singapore. He bought into the put warrants over two local banks in Singapore last Monday. SuperBear chose to buy DBS put warrant DBS MBePW131101 (SG3W), as well as UOB put warrant UOB MBePW131105 (SI6W). SuperBear profited approximately 30 per cent from both DBS and UOB put warrants as the underlying DBS and UOB bank lost about 3.1 per cent and 3.8 per cent respectively. Superbear has yet to close out his positions.

For further information on this article, you can call the Macquarie Warrants Hotline at 1800-288-2880 or drop us an email at [email protected].