Selling smothers optimism

BIG selling wiped out relative optimism at the opening of trading in Hang Seng futures yesterday.

Activity in the market returned to relatively normal levels with turnover reaching 27,000 contracts on strong roll-over activity.

The April futures opened at 8,730 and rose to a daytime high of 8,740, before selling set in.

There appeared to be extremely heavy selling at the end of trading, the second time this has happened in four days of trade.

Some brokers said concerted selling was linked to short covering.

The selling reversed a 20-point premium into a discount on the cash by the close.


April futures closed down 65 points at 8,605 on 15,000 contracts and May was off 70 points to 8,600 on 12,000 contracts.

Friday's open interest recorded 29,617 contracts in April, 6,427 contracts in May and 159 contracts in June.

Jardine Fleming said: 'The options market was quite bullish with active trading on the calls in the near months.' The brokerage said short term bulls bought April 8,600/8,800 call spreads ahead of expiry.

There was selling in May 8,800/9,200 two-by-one ratio spreads.


Volatility players traded June 8,000/9,000 strangles.