HK Warrants Notes | Hang Seng Index holds above 25,000; strong performers are already testing investors' discipline in chasing prices

Hang Seng Index $Hang Seng Index (800000.HK)$ Closing level on July 28 25,310 points on July 28, marking its second consecutive gain and regaining footing above the 25,000 level in the short term, gradually approaching 25,440 pointsResistance.

. The current rebound structure remains intact, but the RSI has already risen into overbought territory. For bull/bear warrant investors, the key focus at this stage is not simply whether the market will rise or fall, but whether the knock-out levels can withstand normal intraday volatility.

The major concentration zone for Hang Seng Index bull warrants is between 24,600 to 24,799 points, while the concentrated bear warrant strike zone is at 25,400 to 25,599 points. In other words, the Hang Seng Index is now nearing a dense zone of bear warrants above. If it breaks above 25,440 points, it could further test the 25,600 level in the short term; however, if it falls back below 25,000 points, investors should beware of a weakening rebound momentum.

Here’s how we view several focus stocks today

Meituan $MEITUAN-W (03690.HK)$ : The uptrend remains strong, but it's unwise to chase aggressively below HK$92.

Meituan closed at HK$90.30It has risen 14.02% over 10 days and 33.48% over 20 days, showing still-prominent short-term momentum. However, the immediate resistance now lies between HK$91.95 and HK$92.20.

Bull warrant street inventory increased by 41.01% in a single day, reflecting growing bullish positioning in the market. However, street inventory is a lagging indicator and doesn’t guarantee a breakout.

For bullish setups, wait either for a confirmed breakout above HK$92.20 or for a pullback before selecting bull warrants with more distant call prices. Chasing nearby bull warrants directly ahead of resistance carries high risk—even with the right directional view, the product itself may be adversely affected by volatility.

CCB $CCB (00939.HK)$ : After hitting a new high, HK$9.15 is the next key level.

CCB has risen for five consecutive days, closing at HK$9.13, approaching the resistance level at HK$9.15. Open interest in both puts and bear warrants has increased simultaneously, indicating that some market participants are positioning for a pullback, though the underlying stock has yet to show clear signs of weakening.

For those bullish on CCB, at-the-money calls are generally more practical than deep out-of-the-money products; for bearish views, it’s better to wait for a failed breakout above HK$9.15 rather than entering against the trend solely based on rising open interest in bear warrants.

CATL $CATL (03750.HK)$ : HK$600 support is more important than open interest

CATL dropped 4.96% in a single day, falling below multiple moving averages and closing at RMB 603.50. Near-term support is concentrated between RMB 598.50 and RMB 600.

Open interest in both bull and bear warrants has risen simultaneously, reflecting widening market divergence: some are betting on a rebound from support, while others are positioning for further downside.

At this stage, it’s unwise to buy solely due to increased bull warrant open interest. If the RMB 600 level holds firm, consider bull warrants with distant call prices or at-the-money calls again; if the price breaks below RMB 598.50, the bearish case becomes more compelling.

Tencent $TENCENT (00700.HK)$ : Still in a range; give the product some breathing room first

Tencent closed at HK$447.20, although it reclaimed the 5-day moving average, it’s still down 5.65% over five days. Near-term support lies between HK$432 and HK$435, with resistance around HK$475 to HK$482.

Open interest in calls and bull certificates has clearly decreased, while open interest in puts and bear certificates has slightly increased. However, this data should only be viewed as reflecting contraction and reallocation of existing positions, not as confirmation of a breakout in the underlying stock.

When positioning within a trading range, knock-out distance is more important than leverage. Bull or bear certificates priced too close to the current market price may face knock-out risk before the anticipated directional move even occurs.

Today's derivative trading reminder

Many stocks have shown strong momentum recently, but product selection shouldn’t be based solely on leverage.

When the underlying stock approaches resistance, deep out-of-the-money calls may not react immediately; similarly, when the underlying nears support, nearby bull certificates can still be knocked out by normal intraday volatility. Changes in open interest should only be used to observe how the market previously positioned itself—not as standalone directional signals.

Today’s clearer strategy is:

For the Hang Seng Index, first watch whether the 25,000 level holds firmly and whether it can break above 25,440; for Meituan and ICBC, wait for resistance confirmation first; for CATL, monitor the RMB 600 support level; and Tencent should still be treated with a range-bound mindset.

The 'Warrants & CBBC Product Overview' has compiled additional details for key stocks—including support/resistance levels, reward-to-risk ratios, warrant strike prices, delta, implied volatility, premium, and CBBC knock-out distances—to help investors compare which products best suit current market conditions after forming their directional views.

Remember to download the 'Warrants & CBBC Product Overview' to compare terms first before deciding which instrument to use for participation.

Overview of Warrants and CBBCs

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