Use recent volatility to judge call risk vs potential return
When the difference between a CBBCs’ call level and the HSI’s spot price is smaller than the highest volatility level in recent market, that CBBC may face higher called risk. Think about a CBBC could be knocked out, if market moves at its highest volatility, just in an opposite direction that an investor expects. On the contrary, when the highest volatility in recent market is in fact, low, that CBBC may face lower called risk. Having said that, a higher volatility and a closer call level, also equal to the chance of getting higher potential revenue from a CBBC. CS provides the recent highest market volatility data, investors can use this data to compare CBBCs with different call level and make the best decision.
Explanation