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Hang Seng Index rebounds toward the upper Bollinger Band; CBBCs aren't necessarily better the closer they are to the spot price

Hang Seng Index $Hang Seng Index (800000.HK)$ Closing at 24,681 points, up 1.4%, the index has extended its short-term rebound from the recent low of 22,518 points. However, it has now reached a relatively sensitive level: the intraday high and the upper Bollinger Band are not far above, so the strike distances for bull and bear warrants should start to be considered separately.

We believe everyone has their own analysis and outlook on the market. We’ll supplement this with an overview of current product terms to see which knock-in levels best suit different trading strategies at this stage.

Hang Seng Index technical levels: 24,775 to 24,857 is the first short-term test zone

The Hang Seng Index’s intraday high stood at 24,774.84 points, very close to the upper Bollinger Band at 24,856.63 points; the Bollinger Band midline sits at 23,703.15 points.

Key levels to watch in the near term:

Level Points Reference Significance

First resistance 24,775 Intraday high; the immediate hurdle to break through in the short term

Second resistance 24,857 Upper Bollinger Band; only after breaking this level will there be clearer room for further upside

First support 24,450 Today's low, also the short-term pullback level

Second support 23,703 Bollinger Band midline; a break below indicates a clear weakening of the rebound structure

Notably, the short-term RSI has risen to 77.6, reflecting strong near-term momentum but also entering overbought territory. This doesn’t necessarily mean the index has peaked, but as the Hang Seng Index approaches 24,800, buying bull certificates with strike prices too close to the current level leaves less room for error compared to recent days.

A clearer way to monitor the situation currently is:

If it stabilizes between 24,775 and 24,857, the rebound could extend further;

If it fails to break out, watch whether 24,450 can hold;

If 24,450 is breached, the next key level shifts back to around 23,703.

Bull certificate distribution: There are many products available, but most have relatively distant call prices.

Excluding JPMorgan and Societe Generale, there are 1,039 Hang Seng Index bull certificates in the market with two-way quotes.

Sorted by distance to call price:

Bull Warrants – Distance to Call Price Number of Products

Within 3% 19 products

3% to 5% 83 products

5% to 8% 144 products

8% to 10% 113 products

Above 10% 680 products

Market supply is clearly concentrated in warrants with a distance to call price above 10%, totaling 680 products—roughly two-thirds of the total. In other words, while issuers offer many bull warrant choices, only a small portion are close to the current market price and suitable for high-sensitivity short-term trading.

Two representative bull warrants selected in this product overview both have a call price of 23,300 points:

Guojun 54388: Leverage of 16.1x, 5.60% from call price, premium of 0.20%

CBBC 55736: Leverage 16.0x, 5.60% away from call price, premium 0.24%

The directional sensitivity of both is very similar, and their terms are also not significantly different. Based on a Hang Seng Index level of 24,681, the distance between the current level and the call price of 23,300 is approximately 1,381 points, which falls within the commonly used range of 5% to 8%.

This type of product is better suited for investors who believe the Hang Seng Index still has the potential to break above 24,857 but do not want to place the call price too close. Even if the index first retraces to 24,450, there remains a buffer of over 1,100 points from the call price.

However, if the Hang Seng Index breaks below 24,450, although the bull CBBC would not immediately enter the call zone, the underlying investment rationale would need to be reassessed. If the index moves closer to the Bollinger Band midline at 23,703, the safety margin relative to the 23,300 call price would narrow rapidly.

Bear CBBC distribution: Near-the-money products outnumber bull CBBCs; extra caution is needed when seeking high leverage.

Excluding JPMorgan and Société Générale, there are 1,018 Hang Seng Index bear CBBCs with two-sided quotes.

Distribution by distance to call price:

Bear CBBC Distance to Call Price Number of Products

Within 3% 127 products

3% to 5% 85 products

5% to 8% 147 warrants

8% to 10% 109 warrants

Above 10% 550 warrants

Compared with bull warrants, there are 127 bear warrants within 3% of the current index level—significantly more than the 19 bull warrants. This reflects that the market offers numerous bear warrants priced very close to the current index, offering high leverage. However, if the Hang Seng Index continues its rebound, these products could quickly approach their call price.

The call prices of the two representative bear warrants discussed here are around 26,000 points:

UBS Group 53776: Call price at 26,038 points, 5.50% away from the current index, with 17.6x leverage

HSBC 54766: Call price at 26,028 points, 5.46% away from the current index, with 18.8x leverage

HSBC 54766 offers slightly higher leverage and a marginally closer call price, but the difference is only 10 points, making their actual risk profiles quite similar.

Based on the current Hang Seng Index level, the 26,000-point call price is approximately 1,350 points away. These bear warrants are not designed to capture intraday pullbacks of just tens of points via ultra-close-to-market pricing. Instead, they maintain a call buffer of about 5.5% to provide higher leverage for participating in potential index declines near resistance zones.

For a bearish strategy, first observe whether the Hang Seng Index meets resistance between 24,775 and 24,857 points. If the index fails to break above this range and falls back below 24,450 points, bear warrants would align well with the market direction. However, if the Hang Seng Index firmly stabilizes above 24,857 points, continued holding of bear warrants requires caution against accelerating rebounds—investors should not ignore directional shifts simply because the call price remains at 26,000 points.

Current product strategy

The Hang Seng Index (HSI) is currently near resistance after a rebound; investors on both bullish and bearish sides should avoid selecting leveraged products based solely on leverage ratio.

For investors favoring bull certificates, a call price of 23,300 offers approximately 5.6% buffer, striking a relatively balanced trade-off between sensitivity and cushion. The key deployment condition is that the HSI must not sustainably break below 24,450—if it does, bull certificate prices could suffer sharp declines due to leverage, even if the knock-in level hasn’t been triggered.

For investors favoring bear certificates, a put price near 26,000 avoids the immediate risk associated with the large volume of bear certificates in the market offering buffers under 3%. However, direction still hinges on confirmation of resistance. If the HSI doesn’t genuinely fall below 24,450, going heavily short merely because RSI is elevated may expose investors to a scenario where the index continues advancing along the upper Bollinger Band.

For those wishing to avoid mandatory knock-in risk, warrants can serve as an alternative instrument. In the product overview, HSI call warrants offer effective gearing of approximately 8.8x to 9.8x, while put warrants provide about 7.4x to 7.6x, with 168 days remaining to expiry. Although their gearing is lower than that of bull/bear certificates, they won’t be terminated due to short-term breaches of knock-in levels.

The HSI’s next move isn’t complicated: first watch whether it can break above 24,857, then monitor whether 24,450 holds. In terms of products, a 5%–8% knock-in buffer remains the most manageable range for now; going tighter may offer higher leverage, but even a normal intraday swing could completely disrupt deployment timing.

Are you currently waiting for the HSI to confirm a breakout, or do you think it’s already worth starting to position for a pullback around the 24,800 level?

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