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What is a MINI?

Defined by the ASX, a MINI is a highly leveraged share tracking warrant. In practice, an investor has the ability to determine what leverage they wish to select from a comparison table, in much the same way as an Option. MINIs, like Options, allow an investor to participate in the movement in price of an underlying asset (both up and down) without physically owning the asset. For trading purposes on the ASX, there are two kinds of MINIs:
  • MINI Long - Profits when the share price goes up.
  • MINI Short - Profits when the share price goes down.

MINIs are always issued "in the money" with a Delta of 1; meaning that they are simple and transparent to use, the MINI will always move 1:1 with the underlying share price. MINIs can be considered as a product that embodies all the advantages of CFDs without the disadvantages. That is, client funds remain on deposit in your own bank account, you trade on a regulated exchange where you remain the legal owner of the securities, and no further margins calls are applicable. MINIs are constructed in a way that you cannot lose more than the initial capital placed in the trade. Unlike CFDs, MINIs have an inbuilt stop loss that is designed to quarantine the downside if there is an adverse share price move. Once the share price hits a stop loss, the MINI ceases to trade and the investor stands to lose some or all of the capital placed in the trade. The obvious solution to avoiding this is if the share price moves towards the stop loss price, the position should be closed out immediately.

Unlike Options, MINIs are issued and listed on the ASX by banks and other financial institutions, meaning that they do not carry standardised strike prices and stop losses. The way that financial institutions make money out of MINIs is that they charge interest or pay interest (on short positions) daily on the outstanding face value of the instrument. The strike price (which one could also consider as the financing level) is the portion of the underlying price that interest is applied on behalf of the holder. The interest charge is then capitalised against the strike price of the instrument. The prevailing interest rate charged is similar to current margin lending rates of interest for long positions. The interest paid on short positions is close to zero. The closer the strike price is to the share price, the greater the leverage taken on the position.

Value is calculated as follows:

Value of a MINI Long = Share Price – Strike Price
Value of a MINI Short = Strike Price – Share Price

Example of a BHP MINI Long:

Share Price 
Strike Price 
MINI Long Price 
 $40.00 $30.00 $10.00

In the above example the financial institution is funding $30 and the client is funding $10. Interest is therefore charged on $30 per share. The higher the strike price the more the financier funds and the higher the leverage.

Example of a BHP MINI Short

Share Price 
Strike Price 
MINI Short Price 
 $40.00 $50.00 $10.00

Again, funding and relative gearing work in reverse, in that the lower the strike price the higher the gearing and the greater the leverage on offer.

MINIs can only be bought to open and sold to close, and are traded on the basis of a cash settlement. As they are quoted on the ASX, the holder can liquidate the position during trading hours. The market for MINIs is open from 10am to 4pm daily, and can be traded in the opening and closing match auctions. Index Warrants can be traded for extended hours (9:50am to 4:30pm).

The code for each MINI is available in the table provided on the PCAS website, and accessing the current market price of each MINI is simply a matter of checking the code in your trading platform during market hours. Unlike Options, there are no contract sizes, meaning that they can be bought and sold in any quantity desired, just like shares.

Codes for a MINI will always have six characters:



BHP - represents the Stock Code
K - Represents what type of warrant the derivative is
M - Represents who the warrant issuer is (i.e. Macquarie, Citi or RBS)
A - Indicates the Mini series (A-O = MINI Long, P-Z = MINI Short)

How / When To Use

MINIs are a tool to use when considering a directional trade. Hence, one should only use them when there is a strong directional view (either bullish or bearish). In taking a MINI position, the question that should be asked is “where is the next resistance or support level on the stock”. Then, work out how much of an increment in price that represents. For example, let’s say $0.20c up or down. If the share price goes up $0.20c then a MINI Long will go up in value by $0.20c. If the share price goes down by $0.20c then a MINI Short will go up in value by $0.20c. MINIs cannot be utilised to place a time decay trade. MINIs are used for directional trades, so success with these instruments will be dictated by your ability to successfully predict share price direction.

  • No set expiry dates, meaning no rollovers or expiries.
  • Volatility not part of the pricing model. This allows purchase of a MINI long or short without paying the premiums for high volatility, such as we are experiencing in the current market.
  • Allows an enhanced range of stocks to trade.
  • Transparent - MINIs are always traded on a delta one, meaning that the derivative moves 1:1 with the underlying share price.
  • Built in Stop Losses ensure that loss remains limited to the outlay.
  • Efficient mechanism to short stocks and indexes.
  • Online and full service execution available with Pulse Platform from just $30 per leg + GST.
  • Spreads generally limited to three points.
  • No margin requirements and no ACH fees.
  • Listed and traded on the ASX - a highly regulated and supervised market.
  • Ability to hold leveraged positions without physical ownership of the underlying asset for a fraction of the cost.

Start learning about MINIs with this Introductory Presentation (164Mb) from Carlo Castellano, who is a professional trader and runs one of the busiest single trading desks in Australia.

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