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HKEx to Introduce Synthetic Futures Trading in its Stock Options Market on 9 May
Hong Kong Exchanges and Clearing Limited (HKEx) will introduce a standard combination trading function in its stock options market on Monday, 9 May this year to allow investors to use synthetic futures strategies in the trading of five active stock option classes: China Construction Bank, China Life Insurance, China Mobile, HKEx and HSBC.
A synthetic futures strategy is a stock option combination which consists of two legs. The buyer in a synthetic futures transaction buys a call option and sells a put option with the same underlying stock, strike price and expiry date, whereas the seller in the transaction sells a call option and buys a put option with the same features. The following table provides an example of synthetic futures transactions:
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Buyer |
Buys one Company A Call Option with a $10.00 strike price that expires in June 2011. |
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Seller |
Sells one Company A Call Option with a $10.00 strike price that expires in June 2011. |
Synthetic futures are designed to help investors manage delta exposure in stock options portfolios and reduce their capital outlays in options-related trading activities.
Information vendors’ access codes for synthetic futures (as at 4 May 2011) are set out in the table below:
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Information Vendor |
Access Code |
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ET Net Ltd.
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Hit “Futures” on menu bar, select “Combo Series Quotation” and then enter HKATS series name |
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Infocast Ltd. |
Select “Derivatives”, "Combo", "Combo Type", "Synthetic Futures" |
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Thomson Reuters
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0#stock code*SF.HK |
Please refer to the circulars issued to Exchange Participants for key market arrangements for the synthetic futures series and other details.
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