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Collar Option Strategy by Major Shareholder caused Sharp Fall in Tencent

China internet giant Tencent Holdings Ltd (0700.HK) share price plunged from above HK$150 to HK$127.40 after its major shareholder Ma Huateng disclosed that he had reduced his stake in Tencent by 5 million shares at $102.70.

 

His disposal of Tencent shares at such a low price was actually committed last June when Tencent share price was between $83 and $96.  Ma had then entered into a contract which involved him implementing a collar option strategy.  A collar option strategy involves simultaneously buying lower strike price put option and selling higher strike price call option while holding the underlying share.  Both the call and put options are out-of-money.  This strategy limits the upside gain of the share but protect the holder from a sharp fall in share price.  The below diagram depicts the payoff of a collar option strategy.

 

Contracts for Difference (CFD) – Instrument to Short

When the stock market was falling the way it did the past few weeks and most of the call warrants becoming out-of-money, investors would have been very interested in products that allow them to short equities. Apart from the index futures products locally and put warrants in some stock exchanges, there are numerous types of instruments that investors can utilize to profit from falling share price.

 

Analysis

Warrant Ranking by Premium (7 Aug 2016)

The following is the list of Warrant Ranking by Premium

Warrant Ranking 7 Aug 2016 by Premium

MALAYSIA LOAN STOCK ANALYSIS 27 MAY 2015

The following is a list of loan stock listed on Bursa Malaysia as at (date).

Malaysia Loan Stock Analysis 270515

Change in Shareholdings (1/5/2015 - 31/5/2015)

The following is a list of change in shareholdings as at (date).

May 2015 (1 May 2015 - 31 May 2015)

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