What is this?
The instructor's real risk-control case from the SDU Theory Class: 2328.HK PICC P&C (PICC Property & Casualty). It shows how to keep the loss to a small amount when the trend turns weak.
What happened?
2328.HK lost momentum after 19 May and entered a range-bound market, closing below $15.5 at the end of June:
The action and actual amounts at every step (20 contracts; each contract = 2,000 shares):
| Date | Action | Premium/share (HKD) | Cash flow (HKD) |
|---|---|---|---|
| 8 May | Short Call, strike $15.5 · May expiry — premium received | +$0.18 | +$7,200 |
| 8 May | Long Call, strike $15.5 · Jun expiry — premium paid | -$0.38 | -$15,200 |
| 19 May | Trend turned — bought back the May Short Call at $0.40 as a stop-loss | -$0.40 | -$16,000 |
| 19 May | Short Call, strike $16 · Jun expiry — collected rent to lower the cost | +$0.46 | +$18,400 |
| End of Jun | Share price closed below $15.5 — both June positions expired worthless | $0 | $0 |
| Total received (premiums collected $7,200 + $18,400) | +$25,600 | ||
| Total paid (premiums paid $15,200 + $16,000) | -$31,200 | ||
| Total loss (-$0.14/share × 2,000 shares × 20 contracts) | -$5,600 | ||
What was the result?
| No risk control: naked long call | With risk control: this deployment | |
|---|---|---|
| Approach | Long Call only Jun expiry, a one-shot bet on a rise | Short Call + Long Call combination stop-loss the moment the trend turned, roll to lower the cost |
| Outcome | Expired worthless everything paid evaporated | Positions also expired worthless premiums received offset most of it |
| Loss | -HKD 15,200 | -HKD 5,600 loss reduced ~63% |
What's the lesson?
- No strategy wins every time — the difference is how much you lose when you lose
- When the trend turns weak, stop-loss and roll to lower the cost — protect your capital and wait for the next opportunity
- We openly share losing cases, because risk management is the very core of this method