STRONG overseas selling pushed Hang Seng Index futures down for a second day yesterday. The March futures is down 350 points from Tuesday's close of 11,500. Yesterday the contract was down 230 points at 11,150, a discount to the cash of 44 points. April futures fell by the same number of points to close at 11,165, a discount to the cash of 30 points. Volume was moderate at 18,704 contracts. There were 18,200 contracts traded in March and 504 contracts in April. Open interest for Wednesday was 42,845 contracts in March. In April there were 2,103 contracts and in June there were 4,899 contracts. Implied volatility in index options rose sharply to above 20 per cent at 21.25 per cent, in the front month at-the-money. Jardine Fleming said out-of-the-money puts were actively traded by hedgers. Short-term bears bought the March 10,600-11,000 put spreads. Implied volatility in April, at-the-money was about 20.5 per cent. In June it was 22.5 per cent and in September it was 23 per cent. Further out, according to W.I.Carr, at-the-money implied volatility in December 1996 is about 24 per cent and in June 1997 it is 25 per cent. In stock options, HSBC was busy with 3,258 lots traded, amounting to 52 per cent of volume in the cash market. This compares with index options which traded 4,119 lots amounting to 22 per cent of the volume of the cash market. Implied volatility in HSBC at-the-money is 22 per cent in the puts and 16 per cent in the calls. Looking out in April the puts were at 23.5 per cent and the calls were 20 per cent. In May the puts were 22.5 per cent and calls 20 per cent. Further consolidation is expected in both the cash and the futures as hopes of an interest rate cut in the United States fade. Upward pressure on bond yields is building which makes equity investment relatively less attractive, and more risky, than the bond markets. Range trading is expected with the low at 11,080 and the high being 11,550. Bear brokers were saying the market was condemned to remain below 11,550 for a number of months. Another rally in stocks might not appear until the late summer.