Call Warrant vs Put Warrant
Call warrant vs put warrant explained: which one profits when the underlying rises or falls, with a payoff comparison and a worked example of each.
By warrants.asia Editorial Team · Published July 14, 2026 · Updated July 18, 2026
Call warrant
A call warrant gives the right to buy the underlying at the strike price — its value rises as the underlying price rises above the strike. Traders buy call warrants to express a bullish view on an underlying without committing the full capital a direct share purchase would require, and without needing to short anything.
Worked example: a call warrant with a strike of RM10.00 and an entitlement ratio of 5, bought for RM0.10 premium. If the underlying finishes at RM11.00 at expiry, it's RM1.00 in-the-money; divided by the entitlement ratio, that pays RM0.20 per warrant — double the RM0.10 premium paid, a 100% return on a 10% move in the underlying.
Put warrant
A put warrant gives the right to sell the underlying at the strike price — its value rises as the underlying price falls below the strike. Traders buy put warrants to express a bearish view, or sometimes to hedge an existing long position in the underlying, without the margin requirements of shorting the stock directly.
Worked example: a put warrant with a strike of RM10.00 and the same entitlement ratio of 5, bought for RM0.10 premium. If the underlying falls to RM9.00 at expiry, the put is RM1.00 in-the-money, paying RM0.20 per warrant — the mirror image of the call example above, profiting from the decline instead of the rise.
Comparing the payoff shape
Both call and put warrants share the same asymmetric payoff shape: value rises steeply once the underlying moves through the strike in the favorable direction, and the maximum loss is always capped at the premium paid if the underlying moves the wrong way. The illustrative payoff charts below show the shape for each — a call warrant's line kinks upward once the underlying (x-axis) passes the strike moving right; a put warrant's kinks upward moving left.
FAQ
Call warrant vs put warrant — what's the difference?
A call warrant gains value as the underlying rises above the strike price; a put warrant gains value as the underlying falls below the strike price. Both cap the maximum loss at the premium paid.
Can I use a put warrant to hedge shares I already own?
Yes — buying a put warrant over a stock you hold can offset losses if the price falls, functioning similarly to a protective put option, without needing a margin account to short the stock directly.
Sources
- InvestSmart: Structured Warrants — Securities Commission Malaysia
- Bursa Malaysia: FAQs on Structured Warrants — Bursa Malaysia
Key resources
Structured warrants homepage · Pricing calculator · Glossary · HSI warrants guide · CBBCs guide
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