❗ ❗ Nikkei and Singapore bank warrants that were on tight spreads, now wide on the back of market carnage

➡️ The bid-offer spread is the difference between the bid and offer price. One of the key reasons investors trade warrants is due to tighter spreads set by market makers. However, there are cases where the warrant spreads go on wide during the lifespan of the warrant.

➡️ With markets experiencing sharp sell-offs today, you may find the offer spreads on many Nikkei warrants for example, being widened due to warrant deltas changing dramatically. Some call warrants may have become very far out-of-the-money (typically with delta less than 15%), while put warrants would have becomes very deep in the money (typically with delta above 85%) given today's highly volatile move. When this happens, you would notice that the offer spreads of warrants have been widened to discourage investors from buying these warrants. Investors interested in buying should consider warrants on tight spreads instead.

For any questions on warrant pricing and spreads, please call us at 📞 +65 6601 0226