[Warrant Insight] Hong Kong Exchanges warrants surged 27% in two days! It turns out these two indicators are driving the move.

11:00 AM on January 8, $HKEX (00388.HK)$

Latest quote at HKD 424.6, temporarily down 1.3%, with a turnover of HKD 654 million. From a technical perspective,The current support levels for Hong Kong Exchanges are HKD 415 (Support 1) and HKD 405 (Support 2), while resistance levels stand at HKD 438 (Resistance 1) and HKD 456 (Resistance 2). The 5-day volatility is 6.5%, with a 52% probability of an upward trend.

In our [Hong Kong Stocks Report], we commented on Hong Kong Exchanges. On January 7, Hong Kong Exchanges performed quite well, showing a slightly stronger trend compared to the Hang Seng Index. We can see it maintaining a high position, although fluctuations in stock prices are normal. However, at least for now, the closing price is above the top of the Bollinger Band, firmly standing around the HKD 430 level. Investors remain optimistic about Hong Kong Exchanges. Regarding resistance levels, reaching HKD 440 may still take some time as the current short-term resistance is around HKD 438. If it breaks through HKD 438, there's indeed a chance it could rise to HKD 440. Based on technical signals, 'sell' signals dominate, with 11 sell signals versus 6 buy signals. Therefore, Hong Kong Exchanges might experience a slightly weaker short-term trend, which investors should pay attention to.January 7 [HK Stocks Podcast] Hang Seng Index, Hong Kong Exchange, Yanzhou Energy, AIA, China Mobile, Alibaba $Hang Seng Index (800000.HK)$$YANKUANG ENERGY (01171.HK)$$AIA (01299.HK)$$CHINA MOBILE (00941.HK)$$BABA-W (09988.HK)$

The volatility of the underlying stock typically spreads quickly to related derivatives like warrants. Let’s first review the recent performance of Hong Kong Exchanges warrants. After a phase of upward movement on January 5, 2026, the relevant warrants responded strongly, with some $UB#HKEX RC2709Q.C (64102.HK)$ rising 27% in two days, $SG#HKEX RC2604F.C (57689.HK)$ up 24% in two days, $MS-HKEX@EC2604B.C (22028.HK)$ up 23% in two days, and even those with relatively lower gains such as $UB-HKEX@EC2606B.C (23422.HK)$ still rising by 17% over two days, while the underlying stock of Hong Kong Exchanges only rose by 2.38% during the same period, clearly demonstrating the leverage effect of warrants.

Behind these numbers lies a simple logic: when the underlying stock rises, call warrants and bull contracts tend to rise as well, and the higher the leverage, the larger the potential increase; conversely, when the underlying stock falls, put warrants and bear contracts may see high returns. Two key factors affect the price movements of warrants: one is how close the strike price is to the current stock price—the closer the strike price is to the current stock price, the more sensitive the warrant is to fluctuations in the underlying stock, resulting in stronger price reactions; the second is changes in implied volatility, which reflects market expectations for future volatility of the underlying stock. Assuming all else remains constant, the higher the implied volatility, the higher the warrant price—even if the underlying stock price does not change, an increase in implied volatility can drive up the warrant price.

Based on the current market conditions of Hong Kong Exchanges and the performance of its warrants, we have selected four relatively high-quality products for investors' reference:

For fellow investors who already hold Hong Kong Exchanges-related warrants, it is recommended to set a profit-taking level. For instance, investors holding $SG#HKEX RC2604I.C (69254.HK)$ could set their profit-taking at 0.1 yuan below the recent high, avoiding profit erosion from pullbacks.

For fellow investors who haven't yet entered the market, it is not advisable to chase warrants that have already seen significant price increases, such as those that gained considerably on January 5. $UB#HKEX RC2709Q.C (64102.HK)$The current premium rate has increased, posing relatively higher risks. Investors may consider alternative options such as Societe Generale Bull Certificate (69254) and Macquarie Call Warrant (22028). Among them, Societe Generale Bull Certificate (69254) has the lowest premium and offers higher actual leverage, allowing for decent returns with a small rise in the underlying stock. Meanwhile, Macquarie Call Warrant (22028) has the lowest premium and implied volatility, resulting in lower investment costs and providing a more stable option.

If investors have a bearish outlook on the short-term trend of HKEX, they can focus on $SG#HKEX RP28123.P (69592.HK)$, which has the lowest premium and an actual leverage of up to 19.1, allowing investors to better capitalize on opportunities brought by declines in the underlying stock. The core reason for choosing these products lies in their low premiums and low implied volatility, which translates into lower risk and reasonable leverage levels, making them well-suited to the current volatile market conditions of HKEX.

Finally, it must be emphasized that, intraday fluctuations may result from short-term speculative trading. If the underlying stock lacks sustained volume support, the warrant could experience a pullback at any time. Moreover, warrants are high-risk derivatives, so before entering the market, investors must carefully check the real-time premium rate and trading volume of the warrant to avoid liquidity issues preventing timely buying or selling.

What is your view on whether HKEX can break through the resistance level of HKD 438? Are the related warrants worth deploying?Feel free to leave your thoughts in the comment section! Want more analysis? Don’t forget to follow ‘HK Stock Warrants Jenny’ for daily updates!

Disclaimer: This article does not constitute any investment advice.

This article is for reference only and does not constitute any investment advice. The market data, opinions, and analysis contained herein may change at any time without prior notice. We shall not be liable for any loss or damage arising from reliance on the information in this article. Technical analysis merely indicates whether certain technical conditions are met; a comprehensive evaluation of asset performance should incorporate additional data. Trading decisions should not be based solely on the content of this article. Please note that past performance is not indicative of future results.

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