Tencent Stock Options Cost a Fortune and Traders Love Them
- Bullish call options pricier than puts for the past two months
- Demand for tech stock derivatives mirrors popularity in U.S.
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Caught off guard by Tencent Holdings Ltd.’s record-breaking rally earlier this year, Hong Kong’s stock investors are getting well prepared for the next one.
For about two months, options traders have consistently shelled out more for bullish three-month contracts on the stock than they’re willing to pay for those protecting against losses, according to data compiled by Bloomberg. That’s kept Tencent’s so-called volatility skew below zero, an unusual quirk for a market that typically sees traders pay more for downside protection than upside speculation.