(From South China Morning Post)
Byline: investment Nichole Chan
Hong Kong Exchanges and Clearing is eager to introduce callable bull and bear contracts (CBBCs) this year to expand the variety of instruments available to retail investors, but some prospective issuers are worried the new products will add hedging costs and inject further volatility to the market.
CBBCs act like knock-out warrants, offering significant gains for a correct bet while helping to limit losses in a falling stock market.
The contracts employ a mandatory "call price" or "knock-out" threshold. If the price of the underlying asset touches the call price, the issuers …