Hong Kong stock-hedging costs tumble ahead of Chinese New Year

Cost of puts versus calls is the cheapest among Asian markets.

For investors wanting to hedge Hong Kong shares, the market offers the cheapest options among major regional peers, according to a report from Bloomberg. Ahead of the Chinese Lunar New Year holiday, contracts protecting against swings in the Hang Seng Index in the coming month have tumbled to their lowest prices in more than a year versus Australia’s S&P/ASX 200 Index, Korea’s Kospi 200 Index and India’s NSE Nifty 50 Index. Relative to the Nikkei-225 Stock Average, they’re near their cheapest since September.

Further ahead, though, volatility bets haven’t fallen as much. That’s because the earnings season will start soon after the week-long break, just as investors will have to deal with potential changes in U.S. trade policies, according to Royan Lam, the head of Hong Kong warrants sales and marketing at Macquarie Group Ltd.’s commodities and global markets unit. The HSI’s implied volatility for the next three months is near its highest level since March 2015 relative to shorter-term wagers, data compiled by Bloomberg show.

Read the full story on Bloomberg here.