Back when I just entered KLSE, I thought that to a certain extent, buying stock can still be considered as a fair game

But when I know there is this product known as structured warrant,

I was convinced that KLSE did provide room for gamblers.

During Oct ~ Dec 2014, it was when 1MDB debt issues been brought up to surface.

This national scandal shocked KLSE and pulled our index down below its 200MA for the first time since early 2012.

Many stocks kept dropping every day except for one, KLCI put warrants.

Note that back in Early Jul 2014, the KLCI call warrants listed in KLSE only reached CI and put warrants only reached HB.

This is the first time I came to know the existence of structured warrants.

Now, KLCI structured warrant has reached C76 and H81.

Back then, investors/traders in KLSE were not familiar with these so called European-style cash-settled call/put warrants.

But, as they tested these structured warrants and gained understanding on it, things turned out a little bit differently.

Under normal circumstances, we can only make profit through price appreciation when a stock goes up.

When a stock comes down, holding a stock is definitely not an option, especially when we don’t know where it will settle down.

Here, structured warrants (to be exact, put warrants) provide opportunity to make profit even when market is heading down.

Once people know how it works, structured warrants become a hot traded product in KLSE.

Hence, during that period, FBMKLCI-HB and HG can easily have their price raised for more than 100% in less than 2 weeks.

This overwhelming respond by the market has convinced many investment banks and eventually led them to create more such products.

Now you can find lots and lots of structured warrants for KLCI and various companies.

Structured warrants provide market participant an option to bid Big VS Small on the direction of an underlying index or stock.

To me, this is almost equal to gamble.

While it is not true to say such warrant has no relation to the fundamental of an index,

But we all know that the direction and momentum of KLCI is highly manipulated.

This product can be an angel or demon just in the blink of an eye.

We might get ourselves burned even if we had considered all relevant factors before we buy.

Despite knowing this, structured warrants still manage to capture my desire to deal with them.

So, whether structured warrant is angel or demon?

I think it has to do with the understanding of people who trade them…. 

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P/S: To sharpen my skill, I do share some stock watch in Invest for Life and facebook https://www.facebook.com/investforlife.com.my/.