Chinese tech stocks are finally getting some love with massive capital flows into Hong Kong tech ETFs (hitting record 35.3 billion yuan inflows) and institutional money betting on a catch-up rally. Multiple brokerages are pointing to improving market conditions and Fed dovish signals as potential catalysts for these underperforming stocks to finally bounce back. The technical setup also looks promising with historical rotation patterns suggesting Chinese tech might be due for its turn after lagging behind for months.
For those bullish on Chinese tech, I'm considering selling the October 17th $38 puts on KWEB (currently trading at $38.38) for $1.41 premium per contract. This gives a breakeven of $36.59 with maximum profit of $141 if KWEB stays above $38 at expiration. The strategy works even if the stock moves sideways or drops slightly, though assignment risk is real if KWEB tanks significantly and you'll be forced to buy 100 shares at $38. I've been tracking this setup through Tiger and like the risk-reward given the potential for Chinese tech to outperform. Not financial advice, DYOR. What are your thoughts on this put-selling approach for the China recovery trade?
Bullish on Chinese tech recovery? Here's my KWEB put-selling play
byu/Mother_Land_4812 inoptions
Posted by Mother_Land_4812
2 Comments
Other than the always presented possibility of govt policy change, I think it’s a good play. Relatively low risk for some decent premiums. I’ll probably sell some OTM puts as well, once I close out some of my other plays this week.
I am doing the same. The Chinese domestic stock market has been on a tear since June. I do not think the bull run is over yet. However, there might be a short term pull back which is good for entry