Duan Yongping sells 225,000 put options! Decoding the underlying options strategy

Yesterday (April 14), well-known investor Duan Yongping revealed on social media that he had sold 225,000 contracts $POP MART (09992.HK)$of put options. This operation instantly sparked heated discussions in the investment community and allowed many investors to intuitively feel for the first time the enormous power of 'options,' which seem like an advanced tool.

Before delving into the analysis of this options trade, some fellow investors may not be very familiar with Duan Yongping himself.

Duan Yongping is a标志性 figure in China's business and investment circles. He first gained fame by creating the 'Xiaobawang' learning machine, then founded BBK Electronics. More famously, as a core investor, he successfully incubated the two major smartphone brands OPPO and Vivo. At the peak of his career, he moved to the United States and transitioned into a dedicated value investor. He has garnered widespread attention for continuously sharing his investment philosophy on social media and practicing Buffett’s value investing principles.

Duan Yongping's investment philosophy is deeply influenced by Buffett, most notably exemplified by his $620,000 bid to have lunch with Buffett in 2006.His actual investment track record is equally impressive: after the burst of the dot-com bubble in the early 2000s, $NetEase (NTES.US)$He made a concentrated purchase in a dire situation and eventually achieved nearly a hundredfold return, becoming a classic case; he was also $PDD Holdings (PDD.US)$an early mentor and key investor to Colin Huang, the founder of Pinduoduo, showcasing his unique ability to identify talent and make forward-thinking investments. Every public move he makes in the secondary market draws significant attention due to his deep industrial background and outstanding investment track record.

We will use this as the core case study to systematically break down options knowledge for you, helping you understand what the masters are doing and how you can safely take your first step.

What considerations lie behind selling Puts?

Duan Yongping's operation, in professional terms, is called 'selling put options' (Sell Put). To understand it, we can think of it as issuing an 'insurance policy':

The role of the seller is that of an 'insurance company': selling a Put means making a commitment to the market: if Pop Mart’s share price falls below the strike price before the agreed date (expiration date), he must buy the corresponding amount of shares at this strike price.

The 'premium' he immediately receives: As compensation for taking on this 'buyout' risk, he collects a premium the moment he sells the option. This is income that is guaranteed regardless of how the stock price changes in the future.

Duan Yongping's attitude towards Pop Mart has undergone a significant shift from 'not understanding' to 'approval'.In 2025, he mentioned that he could not understand Pop Mart's development a decade later, believing its products were interesting but might just be a passing fad like virtual pets. The real turning point came after Pop Mart released its 'explosive' financial report for 2025. Despite the report showing significant growth in both revenue and net profit, the stock price plummeted due to relatively conservative guidance for 2026 performance. Amid extreme market pessimism, Duan Yongping began his research.

He believed that Pop Mart met the criteria of a 'three-good company':

1) A good business model (Right business): He broke the prejudice that trendy toys were just 'a passing trend,' recognizing their essence of providing sustainable emotional value. He highly praised Pop Mart as 'a pioneer in internationalizing Chinese products,' with the success of its overseas stores validating the replicability of its business model.

2) The right management (Right people): After reading founder Wang Ning's interview collection 'Because of Uniqueness' and conducting on-site investigations, he became a fan of Wang Ning, considering him to have top-tier business acumen. The full-chain system built by his team was deemed the company’s core competitive advantage.

3) The right price (Right price): When he made his move, Pop Mart's share price had already dropped by half from its peak and fell another 22% in a single day after the earnings report.

For Duan Yongping, this put-selling operation might be a 'no-lose' scenario:

If the stock price does not crash:On the expiration date of the option, if Pop Mart's stock price is higher than the agreed strike price, the person holding this 'insurance' will not exercise the option (because selling directly on the market would be more cost-effective).He earns the premium for free, similar to an insurance company earning premiums without having to pay claims.

If the stock price falls below the strike price: At the expiration of the option, the put seller must fulfill their obligation and buy the stock with real money. However, since they have already collected the premium in advance, their actual cost of purchasing the stock is “Strike Price - Premium,” which means buying the desired stock at a discounted price.。

This mirrors the classic strategy used by 'Oracle of Omaha' Buffett.In 1993, Buffett was confident that Coca-Cola’s stock price would not fall below $35, so he sold a large number of Coca-Cola put options and collected the premiums. Eventually, when the stock price did not drop below $35, the options expired worthless, allowing Buffett to easily pocket $7.5 million. The logic behind Colin Huang’s operation reflects precisely this kind of “income enhancement” or “discounted position building” strategy. $Coca-Cola (KO.US)$ Reading this, you may feel that options can be so magical, providing an 'advantage no matter whether the market rises or falls'? Hold on, let’s take a closer look~

225,000 contracts, an astronomical figure in terms of weight.

What is shocking about Duan Yongping's operation is the scale: 225,000 Put options. This highlights a core risk of options —The potential losses for the seller can be enormous; for selling Puts, it represents a huge potential buying commitment.

Duan Yongping mentioned a detail in his sharing: he initially did not know that one Pop Mart option contract represented 200 shares.

In the US market, option rules are highly standardized and uniform.Regardless of whether you're trading Apple, Tesla, or any other company, one stock option contract explicitly corresponds to 100 shares of the underlying company’s stock.。However, the size of option contracts in the Hong Kong market is not fixed at 100 shares but varies by company.

On the Futubull app,Fellow investors can click on the option’s quote page to check the contract multiplier, which requires special attention from investors operating HK stock options.

For ease of calculation, let's assume all the options Duan Yongping sold had a strike price of HKD 150. If the options are exercised upon expiration, the amount of funds he would need to deploy will be: 150 * 225,000 * 200 =6.75 billion Hong Kong dollars!

For ordinary investors, selling put options (especially 'naked selling,' i.e., selling without corresponding spot positions or sufficient cash collateral) is equivalent to signing a huge check that one may not be able to cash.If the stock price plummets far below the strike price, you will be forced to buy the crashing stock at a high price, incurring an immediate substantial paper loss. If you don't have enough funds for settlement, you risk forced liquidation or even margin calls.

Duan Yongping's ability to operate at such scale is based on his enormous financial strength and deep confidence in the company's value. Ordinary investors must not only see the allure of 'collecting premiums' but ignore the bottomless pit of 'catching falling knives.'The primary premise of selling options is: you genuinely are willing and have sufficient funds to buy the corresponding number of shares at the strike price, and even if the share price continues to fall after purchase, your overall investment portfolio can withstand it.

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Duan Yongping's operation of selling a massive amount of puts has opened a window for us to observe the world of professional investors. Options are not magic, nor are they terrifying; they are a sharp 'double-edged sword'.On one edge of the sword, masters use it as a powerful tool to intricately carve investment portfolios and achieve efficient returns; on the other edge, it becomes a dangerous weapon that hurts many investors due to their ignorance and greed. When you truly understand it, you possess a more multidimensional and flexible means of expression in the investment world beyond just 'buy' and 'sell'.

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Disclaimer

This content does not constitute any offer, solicitation, recommendation, opinion, or guarantee regarding any securities, financial products, or tools. The risk of loss in buying and selling options can be substantial. In some cases, your losses may exceed the initial margin deposited. Even if you set contingent orders, such as 'stop-loss' or 'limit' orders, these may not necessarily prevent losses. Market conditions may make such orders unexecutable. You may be required to deposit additional margin within a short period. If you fail to provide the required amount within the specified time, your open positions may be liquidated. However, you will still be responsible for any deficit in your account. Therefore, before trading, you should study and understand options and carefully consider whether such trading suits your financial situation and investment objectives. If you trade options, you should familiarize yourself with the procedures during option exercise and expiration, as well as your rights and responsibilities during option exercise and expiration.

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