Three major optical communication stocks have doubled this year. Will the momentum continue?
Warrant Review: Changfei Call Warrants Soar 61% in Two Days, How to Capture a 3.5x Surge?
On March 30,Changfei Fiber Optic Cable (06869) $YOFC (06869.HK)$rose 4.35%, closing at HKD 179.8. The intra-day high reached HKD 185.In terms of market news, Changelong Optical Fiber is about to release its earnings, and the market is paying attention to its leading position in the fiber optic cable industry and progress in overseas market expansion. According to mainland media reports, domestic demand for 5G and data center construction remains strong, keeping the fiber optic cable industry's prosperity at a high level. However, it should be noted that Changelong's stock price has surged significantly in the short term, and whether its earnings can meet the market's high expectations will be key to determining if the stock price can reach new heights.
From a technical perspective, Changelong’s recent upward trend has indeed been sharp – the stock price surged from RMB 45.64 to RMB 206.8, an increase of more than 3.5 times. Currently, the short-term moving averages MA10 (RMB 160.45) and MA30 (RMB 146.68) are still rising rapidly, while MA60 (RMB 105.85) remains far below, with the bullish alignment of moving averages still intact. The RSI has retreated to 62, exiting the overbought region above 70 seen earlier, which actually leaves room for short-term correction. However, there’s an issue: although the CCI indicator signals a “buy,” it also suggests that the stock price is running close to the upper Bollinger Band; meanwhile, the MACD has turned to a “sell” signal, and momentum oscillators also indicate “sell,” showing divergence between trend indicators and price action. In simple terms, prices are fluctuating at high levels, but upward momentum is weakening, which typically implies increasing risks for chasing highs in the short term.
Regarding key levels, initial support below is around RMB 160 to RMB 158.8 (i.e., near MA10 and the recent support mentioned in the Podcast). If this level fails, a retest of RMB 147.3 (near the 30-day line) could occur. Resistance above lies in the RMB 174.5 to RMB 180 range, with further resistance at the historical pressure zone of RMB 199.6 to RMB 215. I believe RMB 160 is currently the most crucial short-term pivot – holding above it would suggest healthy consolidation at high levels; failing to hold it would shake the foundation of this uptrend.
Reviewing the view from the March 24 [Hong Kong Stock Podcast], the show provided quite a clear judgment on Changelong’s short-term trend. At that time, the stock price was around RMB 165, and the analysis pointed out that initial short-term support was around RMB 158.8 to RMB 160, with resistance first seen at RMB 166.2, followed by RMB 170 to RMB 174.5. Investors were watching RMB 180 as a higher target level, not something that would automatically be reached immediately. The show particularly emphasized that for further upside, the stock price must first stabilize above RMB 166.2 and then effectively break through the RMB 170 to RMB 174.5 resistance zone before the market could have the conditions to challenge RMB 180. If the price merely oscillates between RMB 165 and RMB 170 without breaking above RMB 174, this movement could still only be considered consolidation at high levels.
The program also highlighted a key market structure: there are 32 products in Changelong’s warrant market, all call warrants, with no put warrants, clearly reflecting a highly concentrated market direction. The most traded call warrants have exercise prices ranging from RMB 299 to RMB 299.99, with the highest concentration of street inventory in the RMB 208 to RMB 208.99 range, indicating the market prefers deploying more aggressively towards higher target prices. However, the program also warned that such high deployment positions mean that if the short-term surge doesn’t continue, the actual performance of these deep out-of-the-money structures might not be ideal. For investors holding call warrants at RMB 188.88, the program viewed this deployment as aggressive because even if the stock price does rise to RMB 180, these products may not directly reflect short-term gains, offering only moderate-to-aggressive short-term value.
Looking back at the warrant performance on March 23, the two call warrants mentioned that day recorded astonishing increases over the following two days. Morgan Stanley Call Warrant (25655) $MS-YOFC@EC2608A.C (25655.HK)$rose 61%, HSBC Call Warrant (25353) $HS-YOFC@EC2611B.C (25353.HK)$rose 48%, while the underlying stock surged 26.80% during the same period. This demonstrates that in a strong upward trend, deploying call warrants near key levels can amplify the underlying stock's gains by more than 2 times, with significant leverage effects. Conversely, it also warns that once the trend reverses, declines will similarly be amplified.
In terms of product deployment, I'll focus on two different risk-preference strategies. If the stock price can stabilize above RMB 160 and regain upward momentum, Morgan Stanley Call Warrant (26090) is worth noting, with an exercise price of RMB 188.88, only about 4% out-of-the-money, effective leverage of 2.11 times, a premium of 34.3%, and a reasonable street inventory ratio of 2.88%, making it suitable for short-term traders betting on a continuation of the rebound. For those seeking lower costs, Macquarie Call Warrant (25978), also with an exercise price of RMB 188.88, has the lowest premium in the table at 29.68% and effective leverage of 2.38 times, reducing time decay pressure.
If you're more confident about a breakout, consider HSBC Call Warrant (26155), with an exercise price of RMB 208.69 and the highest effective leverage in the table at 2.47 times, suitable for aggressive investors expecting the stock price to break through RMB 174.5 or even challenge RMB 199.6. If you wish to extend your deployment timeline, China Merchants Call Warrant (25815), with an exercise price of RMB 188.88 and the last trading day on October 26, 2026, offers the longest duration among the four products, with an extremely concentrated street inventory ratio of just 0.25%, giving the underlying stock more time to potentially rise.
It is important to be cautious as divergence signals do not disappear but instead accumulate risks with price fluctuations. If the stock price stagnates around the 160-dollar mark or trading volume fails to expand continuously, high-level consolidation could evolve into a deep pullback at any time. The more severe risk is that if the stock price falls below 158.8 dollars, the MA10 support will be breached, rendering the rebound logic immediately invalid. At that point, the pricing pressure on the aforementioned call warrants will significantly increase, particularly for the highly leveraged HSBC call warrant (26155), which may experience a sharper correction. Simply put, 160 dollars is the lifeline of this upward trend—holding above it keeps hope alive; failing to do so calls for reassessment.
Overall, Chang Fei is currently in a contradictory phase of 'bullish moving averages but momentum divergence.' In my view, chasing highs in the short term is not advisable, and 160 dollars should serve as the stop-loss level. If the price can stabilize at this position, one might take a small position to bet on a rebound, targeting an initial goal of 174.5 dollars, at which point further evaluation can decide whether to reduce holdings or switch to out-of-the-money products.
Chang Fei Fiber Optic’s share price has surged from 45 dollars to over 200 dollars, with cumulative gains exceeding 3.5 times—do you think the current pullback is normal profit-taking or a trend reversal? With earnings announcements imminent, would you choose to buy near the 160-dollar mark or wait until after the results are clear before making a decision? Feel free to share your thoughts in the comment section.
Friendly reminder: This article does not constitute any investment advice. It is for reference only and does not constitute any form of investment recommendation. The market data, opinions, and analysis contained herein may change at any time without prior notice. We assume no responsibility for any loss or damage caused by reliance on the information in this article. Technical analysis only shows whether certain technical conditions are met; a comprehensive evaluation of asset performance should be conducted using additional data. Trading decisions should not be made solely based on this article. Please note that past performance is not indicative of future results. Follow Jenny's Warrants HKEX column for more professional insights.
#Changfei Fiber Optic Cable #06869 #Technical Analysis #High Position Consolidation #Support Level #Resistance Level #Warrants #Call Options #Fiber Optic Stocks #Hong Kong Stock Warrants Jenny
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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