Observing Key Stocks in the Warrants Market | Strong performers are approaching resistance levels, while street open interest in both bull and bear warrants for weak performers is rising simultaneously
On July 28, Hong Kong-listed stocks showed significant divergence.
CCB, Meituan, and Horizonrobot continued their upward momentum, with Horizonrobot rising over 8% in a single day. On the other hand, CATL dropped nearly 5% and fell below multiple moving averages. Tencent rebounded above its 5-day moving average (MA5), but its 5-day and 10-day trends have not fully reversed yet.
In this market environment, merely looking at whether the underlying stock is up or down isn't enough. For derivative investors, it's more important to consider three factors together:
the underlying stock's current price position, short-term risk-reward ratio, and the distance between the current price and key concentrations of bull/bear warrants.
First, note that the following changes in street inventory are viewed only aslagging position traces. An increase in street inventory doesn't necessarily mean market participants are correct about the direction, and a decrease doesn't imply that directional view is invalid; especially after sharp moves up or down, changes in street inventory may reflect factors such as position closures, rollovers, or warrant redemptions.
The risk-reward ratio is assessed based on a comprehensive analysis of the stock’s daily, 5-day, 10-day, and 20-day price movements and volume ratios from the uploaded data—it is not a standalone buy/sell signal.
1. Horizonrobot $HORIZONROBOT-W (09660.HK)$ : offers the highest risk-reward ratio, but the HK$5.07 level is just ahead
Horizonrobot closed at RMB 5.00, rising by 8.23%, rising for two consecutive days and breaking above the upper Bollinger Band. It has gained 12.36% over five days, 13.12% over ten days, and a 20.77% increase over twenty days.
Based on its multi-day trend, its short-term risk-reward ratio is approximately 16.03 points, the highest among the stocks in focus this time.
However, there’s also a very practical concern here: the share price is already very close to the 10-day resistance level. RMB 5.07。
This means the underlying stock shows strong momentum, but the entry point is no longer considered low.
Market observations show that Horizonrobot call open interest dropped by 1.45% in a single day, while put open interest plunged by 83.33%. This shift suggests existing positions are being unwound, but it should not be directly interpreted as unanimous market optimism. Especially after a sharp rise in the share price, some investors may simply be taking profits early.
Regarding key zones for bull and bear warrants, there is currently no significant concentration of bull warrants; the bear warrant concentration zone is at RMB 8.10 to 8.19, which is very far from the current price.
This indicates that existing bear warrants are not close-to-the-money or highly sensitive short-term pullback instruments. If investors are bullish on Horizonrobot, they will primarily be choosing among call warrants at this stage.
Product Strategy
When positioning Horizonrobot call warrants, the first step is not to seek the highest leverage, but to consider:
– Whether the strike price is too far from RMB 5;
– Whether the hedge ratio (delta) can keep pace with the underlying stock;
– Has implied volatility been pushed higher due to the sharp rally;
– Can the expiration date withstand the stock price consolidating around HK$5?
If the underlying stock formally breaks above HK$5.07 and stabilizes, at-the-money or slightly out-of-the-money calls will more easily align with the breakout. However, if the price merely touches HK$5.07 before pulling back, deeply out-of-the-money products could face both adverse directional movement and time-value decay.
2. Meituan $MEITUAN-W (03690.HK)$ : The uptrend looks strong, but the immediate test lies between HK$91.95 and HK$92.20
Meituan closed at HK$90.30, up for two consecutive days, approaching the upper Bollinger Band and hitting a monthly high. It has risen 5.99% over 5 days, 14.02% over 10 days, and even 33.48% over 20 days.
The upside reward-to-risk ratio is approximately 14.30 points, indicating that the trend, magnitude of gains, and trading volume remain well-aligned.
However, the stock price has now entered the HK$91.95 to HK$92.20Ahead of the resistance zone. Chasing bullish positions here carries a different risk-reward profile compared to when the price was above HK$80.
Market observations show that Meituan's call warrant open interest dropped 8.98% in a single day, while put warrant open interest rose 2.41%; bull warrant open interest surged 41.01%, and bear warrant open interest also increased by 3.42%.
The significant increase in bull warrant open interest reflects concentrated bullish positioning, but Meituan has already accumulated substantial gains. Rising open interest only tells us how the market previously positioned itself—it does not guarantee a breakout in share price.
Key CBBC strike zones:
– Key call warrant concentration zone:HK$76.00 to HK$76.95
– Key put warrant concentration zone:HK$102.00 to HK$102.95
Both major open interest zones are some distance from the current price. The bull warrant concentration zone is approximately 15% below the current price, while the bear warrant concentration zone is about 13% above.
Product Strategy
Two deployment strategies are currently possible:
Bullish on a breakout above HK$92.20: Consider at-the-money or slightly out-of-the-money calls, focusing on delta and implied volatility—avoid chasing deep out-of-the-money products based solely on low premiums.
Wait for a pullback before turning bullish againIf Meituan first retraces to around HK$89 or even pulls back further to digest its recent gains, bull certificates with more distant call prices will be easier to manage than those closer to the current price.
On the bearish side, existing bear certificate heavyweight zones are above HK$102, with relatively wide distances to the call price, so leverage may not be very aggressive. If one only expects a short-term pullback to HK$91.95–92.20, at-the-money puts might be more straightforward, but note that Meituan has risen over 33% in the past 20 days—when taking contrarian positions, it’s advisable to limit holding periods.
3. China Construction Bank $CCB (00939.HK)$ : Five consecutive gains reaching a new high—can HK$9.15 truly break out?
CCB closed at HK$9.13, up 1.56% in a single day, marking five straight gains and a new all-time high since listing.
Up 6.91% over 5 days, 11.61% over 10 days, and 14.04% over 20 days, with an upside risk-reward ratio of approximately 11.28 pointsUnlike Horizonrobot and Meituan, CCB’s rally hasn’t been as sharp, but its momentum has been more stable and sustained.
The main short-term issue is that both the day's high and the 10-day resistance level sit at RMB 9.15nearby. The current price is only two ticks away and has already reached a clear breakout level.
In terms of open interest, call warrants declined by 2.91% in a single day, while put warrant open interest rose for the third consecutive day, increasing by 28.60% in one day; bull certificate open interest fell by 0.76%, whereas bear certificate open interest rose by 35.27%.
As the underlying stock hits a new high, both put and bear certificate open interest have increased simultaneously, which can be interpreted as some market participants beginning to position for a pullback. However, this merely reflects lagging positioning behavior and could also indicate investors continuously adding contrarian positions during the uptrend—it should not be taken as evidence of an imminent top.
Key open interest zones for CCB are:
– Bull Certificates:RMB 7.00 to 7.09
– Bear Certificates:RMB 9.60 to 9.69
The key bear certificate open interest zone is approximately 5%–6% below the current price, already entering a range that warrants attention. If CCB breaks above RMB 9.15 and continues rising, bear certificates above RMB 9.60 will gradually face increasing pressure.
Product Strategy
For those bullish on CCB, it is currently unwise to overlook product terms simply because bank stocks appear stable.
If deploying bull certificates, those with knock-in prices near RMB 7 are far from the current price, implying lower knock-in risk but also relatively modest leverage. If there are other bull certificates priced closer to the current market price, investors should verify whether their knock-in levels sit above recent support levels.
Regarding call warrants, CCB's volatility is generally lower than that of tech stocks, and deep out-of-the-money calls may not quickly reflect modest upside movements in the underlying stock. Products closer to the money with higher delta are usually more practical than simply chasing high leverage.
For a bearish view, first observe whether the price fails to break above HK$9.15, rather than entering immediately just because bear warrant open interest has increased.
4. CATL $CATL (03750.HK)$ : Bull and bear warrants both increased; the real key level remains at RMB 600
CATL closed at RMB 603.50, down 4.96% in a single day, breaking through multiple moving averages from MA5 to MA120 in one go.
Down 3.59% over five days and 13.17% over twenty days, with a risk-reward ratio of approximately 7.16 points, making it the weakest among the stocks currently in focus.
The current 10-day support level is at RMB 599.50 and RMB 598.50In other words, the underlying stock is already approaching the critical support/resistance zone around HK$600. Whether it bounces technically or breaks below support and accelerates downward will soon become clear.
Market observations show that outstanding call warrants declined by 2.26%, while put warrants rose slightly by 0.17%. Bull warrant open interest has risen for two consecutive days, increasing another 16.07% in a single day, and bear warrant open interest has also risen for three straight days, up 25.50% in one day.
The simultaneous increase in both bull and bear warrant open interest reflects growing market divergence—some are betting on a rebound from the HK$600 support level, while others are positioning for a continuation of the downtrend.
Key CBBC strike zones:
– Bull Certificates:HK$570 to HK$574.50
– Bear Certificates:HK$745 to HK$749.50
The major bull warrant concentration zone is approximately 5% away from the current price, clearly closer than the bear warrant concentration zone. If the HK$600 level is breached, the bull warrant concentration zone will gradually come into market focus.
Product Strategy
Bullish positioning should not be based solely on the increase in bull warrant open interest.
A more prudent approach would be to wait for the underlying stock to confirm support at HK$598.50–600 before considering bull warrants with distant knock-in prices or at-the-money calls. Although bull warrants with knock-in prices near HK$570 offer some buffer, given the underlying stock’s potential for nearly 5% single-day declines, additional room for volatility should still be factored in.
On the bearish side, the major bear warrant concentration zone lies well above HK$745, implying lower knock-in risk but possibly lower leverage as well. If the goal is merely to capture short-term downside following a break below HK$600, factors such as put option price sensitivity, time to expiry, and implied volatility are more worth comparing than nominal leverage.
CATL currently isn’t directionless—it’s just thatSupport level has not yet been officially breachedBefore a clear signal emerges, using high-leverage products too early near current prices can easily lead to being stopped out by volatility.
5. Tencent $TENCENT (00700.HK)$ : Reclaimed the 5-day moving average, but short-term outlook still favors range-bound trading
Tencent closed at HK$447.20, up 0.95% on the day, reclaiming MA5.
However, it is still down 5.65% over 5 days, down 1.97% over 10 days, and up 6.43% over 20 days. The upside reward-to-risk ratio is approximately 0.25, while the downside ratio is about 1.58—neither side shows strong conviction.
This type of price action often misleads derivative investors: a single-day rebound appears bullish, yet the multi-day trend hasn’t fully recovered.
Tencent’s short-term support lies at HK$435.40 and HK$432, with resistance at HK$481.80 and HK$494.80. The current price sits in the lower half of the range, closer to support, but no clear breakout has formed yet.
In terms of open interest, call warrants dropped sharply by 20.41% on the day, while puts rose 8.41%; bull certificates’ open interest declined for three consecutive days, falling 18.88% on the day, whereas bear certificates rose 5.28%.
This set of changes shows that long positions have clearly declined, while short positions have slightly increased. However, one cannot solely rely on open interest to conclude that the HK$432 level will necessarily be breached.
Major open interest zones are:
– Bull Certificates:HK$390 to HK$394.80
– Bear Certificates:HK$475 to HK$479.80
The major bear warrant open interest zone is very close to the first resistance level at HK$481.80. If Tencent breaks above the HK$475–480 range, some bear warrants may gradually face knock-in pressure.
Product Strategy
At present, scenario-based product selection is more suitable for Tencent:
– Holding above HK$432–435: Consider bull warrants with distant knock-in prices, or near-the-money calls with higher delta;
– Breaking above HK$475–482: Watch for pressure from the bear warrant open interest zone; a clearer setup will emerge only after a breakout.
– Fell below RMB 432: Bullish rationale has weakened; consider evaluating puts or bear warrants with more distant knock-out levels.
The least ideal approach is to simultaneously use products with very narrow knock-out distances and high directional sensitivity around the RMB 447 mid-range zone.
Derivatives trading reminder: Three pitfalls to avoid this time
First, strong-performing stocks aren’t suitable for chasing at any price level.
Horizonrobot, Meituan, and CCB have all shown relatively strong price action, but all three are now approaching short-term resistance levels. Even if the underlying stock moves in the anticipated direction, deep out-of-the-money calls or tightly structured bull warrants may still underperform.
Second, an increase in street inventory (open interest) doesn’t necessarily confirm market direction.
Open interest in both bull and bear warrants on CATL rose simultaneously, and open interest in CCB puts and bear warrants also increased as the stock hit new highs. These merely reflect market positioning; ultimate confirmation still depends on whether the underlying stock breaks through or fails at key technical levels.
Third, determine the knock-out distance first, then consider leverage.
Bull and bear warrants often appear cheap with high leverage simply because their knock-out prices are very close. If the knock-out level falls within normal intraday volatility ranges, the warrant may be knocked out prematurely—even if the final directional call proves correct.
Today's five focus stocks can be broadly categorized as follows:
– Horizonrobot, Meituan, CCB: Trending upward, but watch for resistance breakout first;
– CATL: Trending weaker, but support at RMB 600 still needs confirmation;
– Tencent: Still range-bound; product risk tolerance is more important than directional calls.
Which stock are you watching most closely today—awaiting Meituan’s breakout above RMB 92, Horizonrobot’s breakout above RMB 5.07, or checking whether CATL can hold above RMB 600?
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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