HANG Seng index February futures hovered around a narrow range between 11,930 and 12,100 yesterday. The future closed at a 119 point premium to the cash market, at 11,970, having risen 40 points on the day. Open interest on February was estimated at 28,746 contracts, while on the March contract it was 820. March futures closed at 12,030, a 179-point premium on the index close. The contract saw a high of 12,110 and a low of 12,000. In general brokers welcomed the narrowing of the intra-day trading range. Recent trading over 400 to 500 point ranges or swings through 1,000 points in a day had been uncomfortable norms for some traders and investors to deal with. Both contracts see-sawed through the day with institutional selling against local buying in the morning and this was repeated in the afternoon. Some of the prime movers in the market appeared to be Morgan Stanley in the sell side and Wardley on the buy side. In options there was a volume of 1,202 leaving the open interest at 20,088. Implied volatilities on put and call options were around 43 to 41 per cent in February, 45 to 43 per cent in March, 40 to 38 per cent in June and 37 per cent in September. SBC Derivatives said the activity in options focused on selling 10,200 and 10,400 February puts. There was some buying of 12,000 and 12,500 February calls. JF said put selling ''can be due to investors liquidating their put protection when taking profits in the underlying stock portfolio or due to the fact that investors are banking on a quietly bullish market with limited downside risk.'' Salomon issued a two-year, call-covered warrant on the stock of property firm New World Development. The issue was on a premium of 24.5 per cent and a gearing of 3.74 times. There are four listed covered warrants in the group already. A Robert Fleming issue is due to expire on February 21 and another issue is due to die on August 27. this year. In yesterday's derivatives report the information for working out premium and gearing used strike price instead of share price in the equations for calculating these numbers used to value covered warrants. Premium on a call warrant is the warrant price plus the strike price minus the stock price - divided by the stock price. To convert this to a percentage you need to multiply by 100. Nominal gearing is the stock price divided by the warrant price. This gives the investor an impression of the level of exposure that has been obtained for the outlay on the warrant. When calculating the premium and gearing, adjustments may have to be made for the number of shares per warrant. Rumours of further covered warrant issues still persist with Hong Kong Electric being mentioned. Activity is expected to also focus on those blue chips where the covered warrants in existence are due to expire soon. These include Bank of East Asia, Cathay Pacific, China Light and Power, Hong Kong Land, HSBC Holdings, and Jardine Matheson.