Product FAQ｜I hold a bull contract. The spot price of the underlying was trading close to the call price. Why did the bull contract drop to HK$0.015 while the stock dropped only by HK$0.01 given the entitlement ratio is 1?

Think Warrants & CBBCs. Think SG.

The Structured Products are non-collateralised
SG Hotline:(852) 2166-4266

US Market
Underlying
Warrants
CBBCs
Education
HKEXnews

I hold a bull contract. The spot price of the underlying was trading close to the call price. Why did the bull contract drop to HK$0.015 while the stock dropped only by HK$0.01 given the entitlement ratio is 1?

When the underlying spot price is trading close to the call price, the price of the CBBC may become more volatile and the change in the price of the CBBC may be disproportionate to the change in the underlying spot price. Investors should also be aware of the number of outstanding CBBC in the market. The higher the outstanding number, the greater the selling pressure when the underlying spot price gets closer to the call price. This leads to a more volatile price behaviour.

Important Message

SG New Website Design

Contact Us

Online Subscription Form cannot be submitted

I hold a bull contract. The spot price of the underlying was trading close to the call price. Why did the bull contract drop to HK$0.015 while the stock dropped only by HK$0.01 given the entitlement ratio is 1?