Experiences in trading warrants based on the HSI index

For the past month, I've been trading in HSI warrants on SGX. Warrants on SGX are European type.

There are two kinds of HSI warrants. Call warrants and put warrants. These warrants have an expiry date. When it expires, it is worthless. The last day of trading is 5 business days before the warrant expires. That means, if a warrants expire on August 30, its last trading date is August 23.

Once expired, the warrant is worthless, like toilet paper.

Trading in HSI warrants is extremely exciting / dangerous, depending on whether you gain or lost.

Real time HSI prices can be gotten from: www.hsi.com.hk/HSI-Net/HSI-Net (hereinafter referred to as the HSI prices site)
Faster updates for HSI can be taken from: finance.yahoo.com/q?s=^HSI

How to get a steady profit

To get a steady profit on HSI, one can simply refresh the HSI prices site, and as the trading platform you use typically have a 20-minute delay, you can profit from the difference, by using the calculator at www.warrants.com.sg/en/warrants/calculator_e.cgi?code= and calculate the difference between the price based on the delayed index, and the price based on the actual index.

This needs to be done on an intra-day basis. Meaning, the buy and sell transaction must be done on the same day. By doing this, one can earn approximately a few thousand a month.

How to get an extremely high profit / loss

To get an extremely high profit / loss, simply hold on to the warrants for at least 1 day (or at least overnight). The HSI index is known to follow the Dow Jones Industrial Average (DJIA) and when DJIA falls, HSI follows. When DJIA increases, HSI typically follows as well. I say typically, because there are times when this is not true.

So, when DJIA springs a large increase overnight, get ready for a big profit / loss the next morning, depending on whether a call / put warrant is bought.

The gains / losses from this can be quite huge.

From experience, one can easily make 7-8K a month, or lose that amount as well, just performing trades that do not take up more than 10-20 minutes of one's time.