Using put warrants to hedge potential contagion affect from US credit woes
🔻This morning as of 840AM, Asian markets are opening in the red, after two US banks - Western Alliance Bancorp and Zions Bancorp - revealed bad debts tied to the collapse of subprime auto lenders
🫧Gold and silver touched all-time highs as a sign of the risk-off sentiment as the latest piece of news adds to the list of worries surrounding the US market, which includes the government shutdown, fears of an AI bubble and renewed trade tensions between the US and China
🇺🇸The S&P500 December futures is down 1.1% to 6,658 (as of 930AM) from yesterday's 5PM close, while the Nasdaq-100 December futures is trading 0.8% lower to 24,815 versus yesterday's 5PM close
✴✳Consequently, Macquarie's trending S&P500 put warrant $S&P 5900MBePW260320(X1MW.SI)$ (https://warrants.com.sg/tools/livematrix/X1MW) is up 6.3% to SGD 0.084 as of 930AM while trending call warrant $S&P 6850MBeCW260320(KWTW.SI)$ (https://warrants.com.sg/tools/livematrix/KWTW) is down 8.2% to SGD 0.134
✴✳Trending Nasdaq put warrant $NASDAQ 22000MBePW260320(PZBW.SI)$ (https://warrants.com.sg/tools/livematrix/PZBW) is up 2.8% to SGD 0.073 on the index futures' 0.8% fall, while trending call warrant $NASDAQ 25500MBeCW260320(XJIW.SI)$ (https://warrants.com.sg/tools/livematrix/XJIW) is 5.3% lower to SGD 0.126
📈As one can see, put warrants gain when the underlying stock or index falls, and can thus be used as a hedge in the short-term for those fearing a rapid pullback in the US indices from current record high levels
🏆Given the risk-off sentiment in markets this morning, put warrants are invariably amongst the top warrant gainers as of 935AM (https://warrants.com.sg/marketdata/topgainloss)
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