Sales of bull and bear callable contracts, a derivative product launched in Hong Kong two years ago, will likely surpass those of warrants in the first half of next year, as they are attracting investors who wish to bet on short-term volatility. Turnover of the contracts has jumped 12.8 times so far this year from a year ago to HK$984.9 billion, brokerage Societe Generale said. By comparison, warrant sales fell 28 per cent to HK$3.39 trillion. 'There is still room for the growth of bull and bear callable contracts, as a lot of retail investors use them to hedge risk. Those investors prefer day-trading to keeping the [contracts] for longer,' said Edmond Lee, a director of equity derivatives at SG. Bull and bear callable contracts track assets, such as a stock or an index, and expire once the pre-set price is reached, which may happen within days, when big swings occur in the market. Warrants give investors rights to buy or sell a stock at a pre-set price within a period of time. The two main derivative products make up about 25 per cent of the city's average daily market turnover, and that combined share is expected to stay the same next year. Sales of bull and bear callable contracts accounted for just 2.5 per cent of daily market turnover in the first half, but their share jumped to 12 per cent in the fourth quarter as a result of high market volatility. Sales of warrants, the most popular derivatives in the past decade, fell to 10 per cent of daily turnover in this quarter from 14.1 per cent in the previous quarter, SG said. After the collapse of Lehman Brothers in September and the deepening of the financial crisis, the Hong Kong stock market has suffered a swing of 9,000 points, between 11,000 and 20,000, in the fourth quarter. 'Two more investment banks will enter the booming bull and bear callable contracts market next year, as the products have proved to attract strong interest from retail investors,' Mr Lee said.