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Key conclusion: Duan Yongping's stake in Pop Mart has decreased this time $POP MART (09992.HK)$and the reduction of 27.9328 million shares should not be simplistically interpreted as him...is actually a textbook example of post-trade handling after writing covered calls.
After Duan Yongping sold call options and collected the premium, some of those options were assigned at expiration, resulting in physical delivery of shares. More precisely, this resembles a 'covered call' strategy rather than selling put options.
The Hong Kong Stock Exchange disclosure categorized this transaction under code 1203, i.e., 'Delivery of shares or cash pursuant to equity derivatives,' involving 27,932,800 shares, with a disclosed average price of HK$162.50 per share; meanwhile, another filing explicitly stated that the related options experienced “options assigned / expired”, meaning some were assigned and others expired worthless.
The mechanics are as follows: Duan Yongping originally held Pop Mart shares and simultaneously sold Pop Mart call options to collect premiums. Selling calls means that if the stock price reaches or exceeds the strike price, the option buyer exercises the right, and Duan Yongping is obligated to deliver Pop Mart shares at the agreed-upon price. The Hong Kong Stock Exchange previously used code 14012—'Obligation to deliver underlying shares'in its short position disclosure for him, which precisely reflects the legal characteristics of writing call options. Hong Kong Stock Exchange equity options settle via physical delivery, requiring the seller to actually deliver the underlying shares upon assignment, rather than settling only the cash difference.
However,The figure of 27.9328 million shares cannot be simplistically interpreted as a net reduction of 27.9328 million physical shares held by him.The disclosed 'long position' includes both holdings in the underlying shares and long positions in options. Based on the disclosures before and after the event:
Total long position prior to the event:101.8628 million shares, of which derivative-related long positions amounted to approximately 21.02 million shares, implying an estimated physical shareholding of approximately 80.8428 million shares; Total long position after the event:73.93 million shares, of which derivative-related long positions amounted to approximately 2.02 million shares in derivative long positions, implying a reduction of about 71.91 million physical shares。 Therefore, his physical Pop Mart holdings were reduced by approximatelya net 8.9328 million shares; additionally, approximately19 million shares of derivative long positions expired, were exercised, or converted, resulting in a total reduction of 27.9328 million shares in disclosed long positions at HKEX. This breakdown is inferred from the disclosed figures and does not reflect transaction details directly listed by HKEX.
Thus, this move can be summarized as:
Duan Yongping holds shares of Pop Mart and has sold call options to collect premiums; some of these calls were exercised upon expiration, resulting in him delivering a portion of his shares at an effective strike price of approximately HK$162.50, which led to a net reduction of about 8.9328 million shares in his physical holdings. Meanwhile, the expiration or conversion of other option positions reduced his disclosed total long position from 7.65% to 5.55%.
This is exactly the opposite of establishing a position by selling puts:Being assigned on a short put typically increases one’s holdings of the underlying stock, whereas being assigned on a short call results in the underlying shares being 'called away.'
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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