The brokerage said: 'Sentiment in the options market was mixed.' Short-term bulls bid for the December 10,000 calls in the face of severe time decay due to set in next week.

Every option has a value with a time aspect attached. The more life the option has the more time there is available in which money can be made. As the period to expiry closes then less time is available for out of the money options to make money.

Time decay really sets in in the last days of an option's life. Theoretically if the time value of an option is one on the first day of trading it should be zero at the time of expiry.

Jardine Fleming said: 'Hedgers bought January 9,200 puts and January implied volatility dropped to 17 per cent.' Volume in futures was moderate given the lack of institutional participation.

In all there were 16,698 contracts changing hands with 12,040 contracts in December and 4,528 contracts in January.

In index options there were 1,629 contracts traded, against 884 in Cheung Kong, 417 in HSBC and more than 250 in Swire Pacific.

Implied volatility at the money in March 1996 was 20.5 per cent and in June it was 22.5 per cent.

Open interest for Thursday in the futures stood at 19,942 contracts in December. In January open interest was at 22,097 contracts, in March it was 161 contracts and in June it was 1,320 contracts.

Despite the cut in rates of 25 basis points in Hong Kong after the market closed yesterday brokers were pretty sure a bull run would not be triggered as the market had been discounting a cut.

A push through 10,000 in the cash is not being forecast until January as there are only three trading days left in the month.