BULLS got in gear yesterday with the January contract making 182 points in a steady day of gains to make 10,500 at the close. The close marks the sixth consecutive day of gains, taking the future on a 545-point or 5.5 per cent rise from 9,955 on December 21. Tuesday's gain was 178 points. January futures opened strongly at 10,380 and made slow progress in steady morning volumes. The main rise came as overseas buying jumped during the afternoon session. The premium over the cash at the close was 103 points against a 114 point premium on the close on Tuesday. February futures rose 190 points to 10,550, a premium over the cash of 153 points. There was relatively strong activity in the February contract, indicating the high degree of bullishness there is at present in the futures market. Turnover overall was relatively healthy, with 17,211 contracts changing hands. In January futures there were 15,708 contracts traded and in February there were 1,500. Implied volatility in the index options continued to decline to 15.5 per cent. Jardine Fleming said: 'The options market saw active trading on January near-the-money calls on a recent rally.' Bulls bought 10,600 and 120,800 calls. Local bears kept bidding January 10,000 puts. 'Premium sellers sold at the money options and 10,400 straddles in January,' the brokerage said. Premium sellers sell options to pick up income from the sale of the instruments. They make the sales in the belief they will not be exercised. A seller of a straddle is selling at-the-money options. Implied volatility in February, at-the-money, was 16.5 per cent. In March it was 19 per cent and in June it was 21.5 per cent. With 10,500 out of the way investors appeared confident 11,500 was a target set to be reached ahead of the Lunar New Year break, instead of after it. A combination of overseas liquidity and local optimism towards the emergence of a Lunar New Year rally along with a pick-up in activity in the property market has helped the market surge. Open interest on Tuesday for January was 32,908 contracts. In February it was 891 contracts.
