HSI puts gain as underlying tumbles

The Hang Seng Index (HSI) futures fell this morning, to trade below the 17,000 level, approximately 2.0% lower from the previous day’s close. The decline came amid looming fears of a potential recession as U.S. economic data releases on Thursday signalled a contracting economy.

As the futures fell, investors were bargain hunting on HSI call warrants which fell alongside the HSI futures. HSI-CXJ fell the most, recording a 38.5% decrease in its bid price from yesterday's close. Other HSI call warrants which took the spotlight this morning were HSI-CXJ, HSI-CVT, and HSI-CXC. Investors bought a combined net total of over 15M units of these warrants. HSI-CXJ currently has an effective gearing 24.8x, moving 24.8% for every 1% move in the HSI futures.

Meanwhile, our HSI put warrants surged as the futures fell, with HSI-HUO being the biggest gainer, soaring up to 50%. Investors that were holding positions in HSI puts exited their positions, with net selling seen in over 500K units of HSI-HWI, which gained over 32% this morning, and over 250K units of HSI-HWB, which gained over 30%.

Investors net bought:
• HSI-CXJ (-38.5%) 6.7M units
• HSI-CVT (-33.3%) 5.0M units
• HSI-CXC (-24.4%) 3.4M units
 
Investors net sold:
• HSI-CVS (-50.0%) 9.3M units
• HSI-HWI (+32.4%) 500K units
• HSI-HWB (+30.0%) 254K units