Hong Kong tech stocks flirt with peak vega on structured boom
Note issuers sell vol to flatten exposures as Alibaba, BYD, Tencent zig-zag lower
A recent selloff in tech-focused Hong Kong stocks is pushing issuers of structured products on the popular underlyings perilously close to fabled ‘peak vega’ levels, where dealers’ sensitivity to volatility hits a maximum level.
While the scenario is commonly associated with losses when arising from popular autocallable notes linked to equity indexes, dealers see little cause for alarm this time
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