VOLUME shrunk to its lowest level in more than three months in the Hang Seng ndex futures market yesterday.
Turnover overall slumped to 6,356 contracts, down from 10,875 contracts on Friday and 15,129 on Thursday.
Caution towards the issue of important economic numbers in the United States towards the end of the week and the reduction in volume linked to the summer holiday season cut volume.
The August contract fell 20 points to 9,360, a premium to the cash of 42 points, and the September contract slumped by the same margin to make the same close.
Jardine Fleming said: 'The futures took their lead from the physical market where volume was low at $2.18 billion.' Jardine Fleming said of index options: 'Trading was active only in the afternoon when tail buyers looked for August 8,800 put and December 8,400 puts.' The tail, according to the Swiss Bank Corp guide to derivatives, is a reference to the ends of probability distribution where the chances of an occurrence get relatively small.
Some distributions have fat tails, which means there is a relatively higher chance of such an outcome, hence raising relative volume in these speculative type plays.
