HK Stock Market Barometer | Super Earnings Week for HK Stocks!
HK Warrants Notes | After five consecutive gains in the index, it's no longer just about chasing upside—warrant terms selection is now being tested
Market sentiment in Hong Kong stocks strengthened noticeably today, with the Hang Seng Index breaking above the 25,000 mark and posting its fifth consecutive gain. Individual stocks such as Tencent, Kuaishou, BYD, Xiaomi, and Meituan all performed well, making the market appear quite active on the surface.
However, we believe the real challenge investors face when actually trading is usually not 'whether the market rises today,' but rather:
After a run-up, if you're using warrants to chase further gains now, should you choose at-the-money, out-of-the-money warrants, or simply go for bull certificates?
At this level, direction certainly matters, but warrant terms are starting to become even more critical.
Tencent rose to HK$484 today, maintaining a short-term bullish trend and sitting close to the HK$490 level.
Notably,HK$490 to HK$494.8 is precisely a major bear warrant concentration zone.In other words, if Tencent rises further, it won't just technically challenge resistance ahead—it could also enter the call-back zone of a batch of near-the-money bear warrants.
This easily leads to a common assumption: since there are bear warrants above, does that mean the share price must be pushed upward?
We wouldn’t interpret it that way.
A concentration zone simply indicates that a cluster of lagging positions exists there in the market—it doesn’t guarantee the stock price will reach that level, nor does it ensure a breakout once it arrives. For derivative investors, the more practical question is:
– If bullish on Tencent, is it really necessary to choose bull certificates that are too close to the money?
– If Tencent keeps fluctuating around HK$490, can out-of-the-money call warrants keep up?
– If you're bearish, is the knock-out price set too close?
For those already bullish on Tencent, we’ll first compare two types of products.
The first type isbull certificates with a more distant knock-out price.The advantage is that even if the underlying stock experiences normal pullbacks, there’s still some buffer; the downside is that the leverage may not be the highest.
The second type isat-the-money or slightly out-of-the-money call warrants.These products carry no immediate knock-out risk, but you should watch implied volatility, premium, and time decay. If Tencent merely trades sideways instead of breaking out quickly, call warrants may not respond as sensitively as expected.
Therefore, the key discussion point for Tencent now is no longer simply 'whether it will break above HK$490,' but rather:
Would investors prefer lower leverage in exchange for more room for error, or still favor high leverage for short-term trades?
Kuaishou $KUAISHOU-W (01024.HK)$ : Rising smoothly, but approaching the HK$48 zone—the battleground begins
Kuaishou rose again today, marking its fifth consecutive gain and breaking above the 60-day moving average. From the underlying stock’s perspective, short-term momentum is quite evident.
However, the major bear warrant concentration for Kuaishou lies at HK$48 to HK$48.98, which is not far from the current price.
Such levels often lead to two contrasting trading approaches.
Some investors may think that, given the strong momentum and proximity to the bear warrant zone above, it’s a good time to chase bull warrants; others may feel that after several days of gains, caution is warranted against a potential pullback near 48 HKD.
Both views have merit—the key question is whether the chosen product aligns with the strategy.
If bullish on Kuaishou breaking above 48 HKD, we would lean toward watching for:
– Knock-in prices not too close to the intraday low;
– Don’t simply chase the highest leverage;
– Even if the underlying stock pulls back by 2% to 3%, the product should still have room to survive.
If using call warrants, one can compare how close they are to being at-the-money and their delta. Since Kuaishou has already risen for several consecutive days, deeply out-of-the-money call warrants may appear attractive due to high headline leverage, but if the underlying stock consolidates below RMB 48, the warrant’s performance may be subpar.
For bearish positions, caution is equally warranted. If the knockout level of a bear warrant is set around RMB 48 to 48.98, you’re essentially betting that Kuaishou won’t rise even a few more percentage points. Such a strategy isn’t impossible, but the risk is highly concentrated.
Has anyone been paying attention to Kuaishou recently?
Would you treat RMB 48 as a breakout level or initially view it as short-term resistance?
Xiaomi’s share price rose significantly today, with a gain of over 20% in the past 10 days. The underlying stock shows strong momentum, but deploying warrants or CBBCs is actually more challenging now than it was a few days ago.
The reason is simple:The faster the share price rises, the higher the required pace of subsequent gains for the derivative product to perform well.
Major bear CBBC inventory for Xiaomi sits above HK$29 to HK$29.98At the current level, the distance isn’t too far, and HK$30 is also a natural psychological resistance level.
If you’re bullish on Xiaomi continuing its upward momentum, there are typically three common approaches in the market:
1. Use in-the-money call warrants to gain higher sensitivity to the underlying stock;
2. Use at-the-money call warrants to balance leverage and time value;
3. Use bull certificates to capture short-term breakouts.
We ourselves would pay closer attention to the second approach.
The reason is that Xiaomi has already risen significantly. If you opt for deeply out-of-the-money call warrants, the product would require the underlying stock to keep rising rapidly to offset both the degree of being out-of-the-money and time decay. Even if Xiaomi merely trades sideways at elevated levels—without your directional view being entirely wrong—the warrant may still fail to follow suit.
The same applies to bull certificates. For volatile stocks like this, daily moves of 4% to 6% are not uncommon. If the knock-out price is set too close, you could be stopped out during normal market fluctuations.
Therefore, with Xiaomi at this stage, the key question isn’t ‘bullish or bearish,’ but rather:
Do you expect Xiaomi to rise gradually, or will it quickly break through the HK$29–30 range?
The two expectations should be paired with entirely different terms.
Meituan $MEITUAN-W (03690.HK)$ : Both bulls and bears are adding positions—the divergence is more telling than the direction
Meituan also strengthened today, breaking above the upper Bollinger Band. The short-term sentiment appears quite positive based on price action.
However, the derivative market tells a more interesting story: outstanding call warrants surged significantly, while outstanding put warrants also rose in tandem.
This does not indicate unanimous bullish sentiment; rather, it resemblesboth bulls and bears ramping up their bets simultaneously。
Some investors believe Meituan’s rally has just begun and are using call warrants to chase the trend, while others think the recent surge has been too rapid and are positioning for a pullback.
We interpret this situation as 'widening divergence' rather than confirmation of a clear directional move.
The major concentration zone of put warrants above Meituan’s current price is at HK$95.00 to HK$95.95, still some distance from the current price; the major concentration zone of call warrants below is at HK$70.00 to HK$70.95。
From a distance perspective, the nearest bearish warrant strike is relatively close on the upside in the short term, but this does not necessarily mean the stock price will move upward. What truly affects product selection is whether Meituan will first retest support before rising again.
If bullish, we would prefer bull warrants with more distant call prices to avoid being knocked out by a normal pullback. If using call warrants, priority should be given to how close they are to the spot price and their delta, rather than just looking at nominal leverage.
If bearish, put warrants offer slightly more time and room compared to deeply in-the-money bear warrants, though one must still accept the impact of time decay and implied volatility.
Meituan is actually very suitable right now for discussing an important question:
Will market participants interpret today’s breakout as the start of a new rally, or as a high-risk level following short-term overheating?
BYD $BYD COMPANY (01211.HK)$ : Price trend looks intact, but rising put warrant open interest warrants attention
BYD also showed solid performance today, posting consecutive gains and breaking above its 60-day moving average. Compared to other popular stocks, BYD’s trend structure appears relatively well-formed.
However, the derivative market sentiment is not uniformly bullish. While open interest in bull warrants has increased, put open interest has also been rising consecutively.
This situation typically reflects the simultaneous presence of two types of capital flows:
– One side continues chasing the upward momentum;
– On the other hand, start capturing pullbacks after a sharp rally.
For those bullish on BYD, at-the-money or near-the-money call warrants generally track the underlying stock more closely than significantly out-of-the-money products. Even if the underlying stock rises only gradually, at-the-money warrants still offer higher sensitivity.
Regarding bull certificates, ask yourself a very practical question:
If BYD first pulls back by 3% to 5%, would you still be willing to hold your position?
If the answer is yes, then the knock-out level should not be set too close.
If you're only playing a short-term breakout, bull certificates can enhance efficiency; however, if you expect to hold for a longer period, call warrants or bull certificates with a more distant knock-out level may better align with your risk profile.
For today’s warrant strategy, we’ll keep four key points in mind:
First,After a sharp rally, first consider the distance to the knock-out level, then look at leverage.
High leverage is indeed attractive, but if the knock-out level is too close, the product may lose value before your directional view is proven wrong.
Second,Even if the underlying stock rises, out-of-the-money call warrants do not necessarily follow.
The degree of being out-of-the-money, implied volatility, premium, and time value all affect how the product responds.
Third,Heavy open interest zones are not predictive lines.
They merely reflect leftover positions from the previous trading day, useful for observing where market positioning is more crowded, but should not be directly interpreted as price targets that the stock must reach.
Fourth,When both bullish and bearish street inventory increase simultaneously, it usually indicates widening divergence in market sentiment.
Meituan shows this most clearly, with Tencent and BYD exhibiting similar patterns. These data points are better suited for risk awareness rather than as direct contrarian trading signals.
Today's product overview has consolidated the terms of call warrants, put warrants, bull certificates, and bear certificates for popular stocks. We believe everyone already has their own view on the market outlook; what we’d like to emphasize is this: even when equally bullish on a stock, choosing deep-in-the-money, at-the-money, out-of-the-money warrants, or bull certificates can lead to very different outcomes.
Recently, have you been focusing most on Tencent, Kuaishou, Xiaomi, Meituan, or BYD? Are you currently prioritizing leverage, or knock-out distance and term stability?
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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