HK Warrants & CBBC Notes | Market Rebounds – Not All Upswings Suit the Same Product Type

Market sentiment in Hong Kong stocks improved noticeably today, with many large-cap stocks rising alongside the broader market. However, when examining the underlying stock trends, fund flows, warrant/CBBC open interest patterns, and major CBBC concentration zones together, the situation is actually quite different.

A quick reminder here: the open interest data shown in market observations is July 17 closing data, while the underlying stocks reflect July 20 closing data. Therefore, open interest should only be viewed as a footprint of positions established earlier, not as a real-time trading signal for today.

Today, we are paying closer attention to six stocks:

Tencent, CNOOC, China Construction Bank, SMIC, Xiaomi, and JD.com.

Tencent $TENCENT (00700.HK)$ : Uptrend strengthening, but significant CBBC concentration zone emerges near HK$495

Tencent rose 3.51%, breaking above its 5-day and 10-day moving averages, with net inflows of approximately HK$434 million from institutional funds. Bullish open interest increased, while put warrant and bear CBBC open interest declined notably, aligning with the rebound in the underlying stock.

However, the bear CBBC concentration zone is clustered around HK$495 and HK$499.8。

If Tencent continues to rise, the HK$495 level may gradually become a more significant support/resistance zone. Being bullish doesn’t mean you should immediately chase the closest-to-the-money bull warrant above HK$477; it would be more reasonable to first watch whether HK$481.8 can be broken.

CNOOC $CNOOC (00883.HK)$ : It rose the fastest today, but products (e.g., warrants) shouldn’t be selected too aggressively.

CNOOC rose 5.19%, with volume nearly double the average, breaking above the upper Bollinger Band—showing notably strong price-volume confirmation.

However, street inventory of bull warrants has declined consecutively, while bear warrant inventory has risen consecutively, reflecting lingering market divergence as recently as yesterday.

CNOOC’s key bull warrant concentration zone lies between HK$18 and HK$18.99, while its key bear warrant zone is between HK$31 and HK$31.98—both relatively far from the current price.

This indicates that the near-term focus isn’t on knock-out levels, but rather on whether the stock price can sustain its breakout. With today’s gain exceeding 5%, if the stock pulls back tomorrow, the nearest-strike bull warrants will experience very direct volatility. Investors bullish on the medium-term outlook might instead consider bull warrants offering more buffer, or at-the-money call warrants with longer maturities.

CCB $CCB (00939.HK)$ : Mainland funds have flowed in for 11 consecutive days—a trend more noteworthy than a single-day gain.

CCB rose 4.34%, marking its third consecutive gain and breaking above both the 60-day moving average (MA60) and the upper Bollinger Band. Most notably, institutional funds have flowed in for 11 consecutive days。

Call open interest increased, while bull warrant open interest declined for consecutive sessions, indicating that investors leaning bullish aren’t necessarily using the same type of instruments.

The major bull warrant concentration zone for CCB is between HK$7.00 and HK$7.09, while the bear warrant zone lies between HK$9.60 and HK$9.69—both still some distance from the current price.

Bank stocks typically don’t rally as sharply as tech stocks. When selecting products, it’s unnecessary to chase the highest leverage. At-the-money or slightly out-of-the-money call warrants with longer tenors and reasonable bid-ask spreads often better suit this kind of gradual uptrend.

SMIC $SMIC (00981.HK)$ There’s rebounding capital inflow, but the bull warrant zone near HK$65 cannot be ignored

SMIC rose 3.03%, with net institutional inflows of approximately HK$271 million, reclaiming both the 250-day moving average (MA250) and the lower Bollinger Band.

Call open interest has risen for six straight sessions, put open interest has fallen for six straight sessions, and bull warrant open interest has also increased for six consecutive days—making it the stock among today’s focus names with the most consistent bullish positioning signals.

However, SMIC is still down nearly 11% over the past five days, suggesting today’s move resembles a post-decline recovery. The major bull warrant concentration zone is at HK$65 and HK$65.95, not far from the current price.

Therefore, for a bullish view on SMIC, the call warrant’s knock-out price should not be set too close to the dense call warrant zone around HK$65. If the rebound fails, related products could face concentrated pressure. As for call warrants, first watch whether the HK$72 level can be broken; only then can we determine if this is merely a rebound or a genuine trend reversal.

Xiaomi $XIAOMI-W (01810.HK)$ It broke above the 60-day moving average, but trading volume has yet to fully confirm the move

Xiaomi rose 3.2%, with net inflows of main-force funds amounting to approximately RMB 195 million, breaking above the 60-day moving average and approaching the upper Bollinger Band.

However, the volume ratio is only 0.7x, indicating the upward move hasn’t been accompanied by significantly higher volume. Call warrant open interest has also declined for two consecutive days, showing a lack of full synchronization with the underlying stock’s rally.

Both the call and put warrant dense zones for Xiaomi are relatively far from the current price, so in the short term, more attention should be paid to whether the underlying stock can break above HK$27.86 and whether trading volume increases.

If trading volume remains low, choosing highly leveraged products may not be advantageous. If the underlying stock trades sideways, the impact of time decay and implied volatility on warrants will become more pronounced.

JD.com $JD-SW (09618.HK)$ Capital has been flowing in consecutively, but the bear warrant zone at HK$135 overhead is worth noting first

JD.com rose 3.18%, with main-force funds flowing in for three consecutive days and today’s net inflow reaching approximately RMB 184 million.

However, call warrant open interest has declined for nine straight days, while put warrant open interest rose by 22.82%, reflecting divergent market views on whether the rebound will continue.

JD.com's heavy bear warrant zone is at HK$135 to HK$139.9, still some distance from the current price, but this area will gradually become significant if the subsequent rebound continues.

For now, watch whether the HK$120.6 level can be broken. If the rebound remains gradual, at-the-money call warrants typically track the underlying stock's movement more closely than deep out-of-the-money products.

Today's derivative trading reminder

The easiest mistake to make in today's market is assuming that because the broader market is rebounding, all stocks can be chased higher using the same strategy.

In fact:

– Tencent: Watch the bear warrant zone above HK$495;

– SMIC: Defend the bull warrant zone around HK$65;

– CNOOC has risen sharply; avoid chasing warrants too close to the spot price;

– CCB shows the most consistent continuous fund inflows;

– Xiaomi still needs volume confirmation;

– For JD.com, first watch whether it can break through HK$120.6.

Street inventory (open interest) is merely a snapshot of earlier positions, and heavy concentration zones are not necessarily support or resistance levels. What’s truly useful is integrating this data with the underlying stock’s technical levels, fund flows, and distance to call price.

Today is a rebound market—being right on direction alone isn’t enough. If the product selected is too close to the spot price, too far out-of-the-money, or has too short a time to expiry, it’s still possible to see the underlying stock rise while the warrant responds poorly. This is precisely where the Product Overview is most valuable: rather than just looking for the product with the highest leverage, you should first determine which stocks are suitable for breakout plays, which should wait for pullbacks, and which already have call prices drawing near.

For more individual stock analysis and to compare terms across different call warrants, put warrants, bull certificates, and bear certificates, download the 'Warrant & CBBC Product Overview.' It compiles additional focus stocks, key support/resistance levels, short-term risk-reward ratios, and representative products’ leverage, moneyness, expiry dates, and distances to call price—making it easier to compare options based on your trading view.

Overview of Warrants and CBBCs

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