I have decided to stop exploring HSI Option trading for the following reasons:
1. Low volume for next month contract (covered in this post)
- I normally enter a trade 6-8 weeks before expiration. That means, I don't really trade current month contract. I trade the next month or next next month contract.
- the low Open Interest in next month (worst in next next month) contract is the main reason I don't want to force myself into trading HSI Option.
2. All the reasons cover in previous review here.
Therefore, I will stop cover HSI with immediate effect and focus back on N225 and K200.
Showing posts with label HSI. Show all posts
Showing posts with label HSI. Show all posts
Saturday, August 23, 2014
Saturday, August 16, 2014
Weekly Market Reivew HSI
HSI closed at 24,954.94 on Friday, 15-Aug-2014, gained 623.53 (2.56%) over the last 5 trading days.
Looking at the Weekly/Monthly chart, not much changes. HSI broke 25,000 briefly on Friday but didn't close above that. We need to see if it can stay above 25,000 in the coming week.
Looking at the Weekly/Monthly chart, not much changes. HSI broke 25,000 briefly on Friday but didn't close above that. We need to see if it can stay above 25,000 in the coming week.
Saturday, August 9, 2014
Weekly Market Reivew HSI
HSI closed at 24,331.41 on Friday, 8-Aug-2014, lost 201.02 (0.82%) over the last 5 trading days.
Looking at the Weekly chart, not much changes. This week just seem to be a pause. 25,000 seems to be a strong resistance. And we are still on a short term uptrend. Same for Monthly chart.
Looking at the Weekly chart, not much changes. This week just seem to be a pause. 25,000 seems to be a strong resistance. And we are still on a short term uptrend. Same for Monthly chart.
Saturday, August 2, 2014
Weekly Market Reivew HSI
HSI closed at 24,532.43 on Friday, 1-Aug-2014, gained 347.03 (1.43%) over the last 5 trading days.
Looking at the Weekly chart, we still have a bullish bar despite with a fairly long tail/wick. 25,000 seems to be a strong resistance. Nevertheless, we are clearly on a short term uptrend.
From Monthly chart, nothing much has changed. We will just have to watch 25,000 for upside breakout.
Looking at the Weekly chart, we still have a bullish bar despite with a fairly long tail/wick. 25,000 seems to be a strong resistance. Nevertheless, we are clearly on a short term uptrend.
From Monthly chart, nothing much has changed. We will just have to watch 25,000 for upside breakout.
Saturday, July 26, 2014
Weekly Market Reivew HSI
HSI closed at 24,216.01 on Friday, 25-Jul-2014, gained 761.22 (3.25%) over the last 5 trading days.
Looking at the Weekly chart, what a long green bar!. HSI didn't just cross 24,000. It beat the previous high and end the week wtih a higher high.
From Monthly chart, Friday close is the highest for past 3 years! The next target is 25,000. If HSI break 25,000, it will be the highest since the low in 2009.
Looking at the Weekly chart, what a long green bar!. HSI didn't just cross 24,000. It beat the previous high and end the week wtih a higher high.
From Monthly chart, Friday close is the highest for past 3 years! The next target is 25,000. If HSI break 25,000, it will be the highest since the low in 2009.
Saturday, July 19, 2014
Weekly Market Reivew HSI
HSI closed at 23,454.79 on Friday, 18-Jul-2014, gained 221.34 (0.95%) over the last 5 trading days.
Looking at the Weekly chart, last 2 weeks are inside bars. Nevertheless, it looks like in uptrend towards 24,000.
This seems to be a major resistance, especially from Monthly chart.
Looking at the Weekly chart, last 2 weeks are inside bars. Nevertheless, it looks like in uptrend towards 24,000.
This seems to be a major resistance, especially from Monthly chart.
Saturday, July 12, 2014
Weekly Market Reivew HSI
I started to look at HSI this month to diversify, especially when N225 is having such a low volatility. While I have written in this post that HSI is not as attractive as K200 (and N225), it nevertheless is another popular Asia index that I can trade in Asia hours.
HSI closed at 23,233.45 on Friday, 11-Jul-2014, lost 312.91 (1.33%) over the last 5 trading days.
HSI seems to be also in a period of low volatility, unfortunately. The daily and weekly movement this month to date is rather small.
HSI Options Open Interest (OI) is very small as compare to N225 or K200 for future months, even for current+1 month (August). You only see OI >1K contracts in July.
For K200, you can easily get >1K contracts in OI even for further month like September.
This might be a challenge for me as I don't usually trade the current month. Will assess for 1 month.
HSI closed at 23,233.45 on Friday, 11-Jul-2014, lost 312.91 (1.33%) over the last 5 trading days.
HSI seems to be also in a period of low volatility, unfortunately. The daily and weekly movement this month to date is rather small.
HSI Options Open Interest (OI) is very small as compare to N225 or K200 for future months, even for current+1 month (August). You only see OI >1K contracts in July.
For K200, you can easily get >1K contracts in OI even for further month like September.
This might be a challenge for me as I don't usually trade the current month. Will assess for 1 month.
Friday, January 24, 2014
HSI Index Option Review
I want to trade another market/product in addition to K200 Index Option to diversify. With that, I start to explore Hong Kong Hang Seng Index Option.
Basic Option Spec: (http://www.hkex.com.hk/eng/prod/drprod/hkifo/options.htm)
Cost of Trading
1. Market Data HKD 40.00 HKD (~USD 5.16)
- Hang Seng Indices HKD 15.00
- HKFE Deriv HKD 25.00
- Korean Stk Exch Deriv Free
IB market data is generally cheap. While USD 5.16 market data per month is not expensive, it is relative more expensive than other exchanges. For example, Korea is free, Singapore is SGD 1.00 (~USD0.78) and US Bundle (USD 10.00) & US Options (USD 1.50) are waived when monthly commission generated reached USD 30.00 & USD 20.00 respectively.
2. Commission
- HKD 30.00 (~USD3.86) per contract
- 0.2% of option value, min KRW 1,000 (~USD 0.93) per order
For a 10% premium collected from Credit Spread,
- HSI commission will take 6% away from the 10% premium received, ie for every $100 premium received, $6 will be deducted for commission.
- K200 commission will only take about 0.76% (depending on contract value) from the premium, ie for every $100 premium received, only about $0.76 is deducted for commission.
3. Margin
- for a HSI Option 200pt Spread (min spread), the Initial & Maintenance margin is about USD 1,201 & USD 961 respectively
- for a K200 Option 2.5pt Spread (min spread), the Initial & Maintenance margin is about USD 637 & USD 510 respectively
For HSI Option, selling a 200pt Spread to receive say 20 pt (10% min premium) is about HKD 1,000 (~USD 128.81), I will need to tied up USD 1,201/961 initial/maintenance margin. Return On Margin (ROM) is 10.72%/13.40%.
For K200 Option, selling a 2.5pt Spread to receive say 0.25 pit (10% min premium) is about KRW 125,000 (~USD 115.75), I will need to tie up USD 637/510 initial/maintenance margin. Return On Margin (ROM) is 18.17%/22.69%.
4. Option price spread and volume
K200 Option spread is generally about 2 ticks wide. Selling at midpoint has been generally successful. The Bid and Ask volume is also good.
However, HSI Option spread is about 4 ticks wide. Selling at midpoint has been not successful. The Bid and Ask volume is also comparatively lower.
Risk/Reward
1. Spread Risk
- min spread is 200 points, which equate to HKD 10,000.00 (~USD 1,288.94)
- K200 min spead is 2.5 points, which equate to KRW 1,250,000 (~USD 1,165.39)
- this is about the same
2. Support & Resistance
- as my selection of Strike is primary base on Support & Resistance, the validity of Support & Resistance is important
- HSI gaps up & down very often. This make the Support & Resistance not so reliable. Very unpredictable. This inherently results in higher risk.
- In addition, the up & down swing could be 300-500, even 700 points in one day!
Conclusion
HSI Option is not easy to trade as there are too many gaps up & down. And the up & down swing is huge. This make selection of Strike extremely difficult. It is thus more risky. The short strike could be hit easily. In addition, for the same USD 100 premium received, I will need almost twice the margin as compared to K200. Not to mentioned, the commission and market data fee is higher.
Therefore, HSI Option is not a suitable market/product for me to trade (at least for now). I will need to expore some more market/product, such as Japan or Europe Options.
Basic Option Spec: (http://www.hkex.com.hk/eng/prod/drprod/hkifo/options.htm)
- Exercise Style : European
- HSI Option is HKD 50 per index point
- Minimum Spread : 200 point, ie HKD 10,000 (~USD 1,288.94)
- Trading Hours is 9:15m - 12:00noon & 1:00pm - 4.15pm
Cost of Trading
1. Market Data HKD 40.00 HKD (~USD 5.16)
- Hang Seng Indices HKD 15.00
- HKFE Deriv HKD 25.00
- Korean Stk Exch Deriv Free
IB market data is generally cheap. While USD 5.16 market data per month is not expensive, it is relative more expensive than other exchanges. For example, Korea is free, Singapore is SGD 1.00 (~USD0.78) and US Bundle (USD 10.00) & US Options (USD 1.50) are waived when monthly commission generated reached USD 30.00 & USD 20.00 respectively.
2. Commission
- HKD 30.00 (~USD3.86) per contract
- 0.2% of option value, min KRW 1,000 (~USD 0.93) per order
For a 10% premium collected from Credit Spread,
- HSI commission will take 6% away from the 10% premium received, ie for every $100 premium received, $6 will be deducted for commission.
- K200 commission will only take about 0.76% (depending on contract value) from the premium, ie for every $100 premium received, only about $0.76 is deducted for commission.
3. Margin
- for a HSI Option 200pt Spread (min spread), the Initial & Maintenance margin is about USD 1,201 & USD 961 respectively
- for a K200 Option 2.5pt Spread (min spread), the Initial & Maintenance margin is about USD 637 & USD 510 respectively
For HSI Option, selling a 200pt Spread to receive say 20 pt (10% min premium) is about HKD 1,000 (~USD 128.81), I will need to tied up USD 1,201/961 initial/maintenance margin. Return On Margin (ROM) is 10.72%/13.40%.
For K200 Option, selling a 2.5pt Spread to receive say 0.25 pit (10% min premium) is about KRW 125,000 (~USD 115.75), I will need to tie up USD 637/510 initial/maintenance margin. Return On Margin (ROM) is 18.17%/22.69%.
4. Option price spread and volume
K200 Option spread is generally about 2 ticks wide. Selling at midpoint has been generally successful. The Bid and Ask volume is also good.
However, HSI Option spread is about 4 ticks wide. Selling at midpoint has been not successful. The Bid and Ask volume is also comparatively lower.
Risk/Reward
1. Spread Risk
- min spread is 200 points, which equate to HKD 10,000.00 (~USD 1,288.94)
- K200 min spead is 2.5 points, which equate to KRW 1,250,000 (~USD 1,165.39)
- this is about the same
2. Support & Resistance
- as my selection of Strike is primary base on Support & Resistance, the validity of Support & Resistance is important
- HSI gaps up & down very often. This make the Support & Resistance not so reliable. Very unpredictable. This inherently results in higher risk.
- In addition, the up & down swing could be 300-500, even 700 points in one day!
Conclusion
HSI Option is not easy to trade as there are too many gaps up & down. And the up & down swing is huge. This make selection of Strike extremely difficult. It is thus more risky. The short strike could be hit easily. In addition, for the same USD 100 premium received, I will need almost twice the margin as compared to K200. Not to mentioned, the commission and market data fee is higher.
Therefore, HSI Option is not a suitable market/product for me to trade (at least for now). I will need to expore some more market/product, such as Japan or Europe Options.
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