Many CBBC investors will refer to the CBBC’s outstanding distribution chart or money flow to observe other investors' orientations in the market. However, if only one single data is considered, under certain market conditions, conclusions inconsistent with the facts may be drawn.
For example,
when the HSI surged by 500 points one day, and bulls then recorded a money outflow, there may be investors who hastily made a conclusion that "the market may not rise again, so investors should sell long positions to take profits immediately if it is profitable”. Maybe investors who are selling CBBCs do have such an idea, but the truth needs to be illustrated by an outstanding distribution chart.
If the outstanding distribution chart
shows that the overall outstanding quantity of bulls decreases when there is a money outflow from bulls, the idea of “profit-taking” may be initially justified; but if the overall outstanding quantity of bulls is more or less the same or it even increases when there is a money outflow from bulls, the truth may be that investors are not fully “taking profits”, but only partially “switching CBBCs”, that is, selling bulls with further call levels and higher prices and switching to bulls with closer call levels and lower prices in order to continue to benefit from the further rise in prices in the market using a small amount of fund, which causes a phenomenon of “money outflow from bulls”. The outstanding distribution chart also shows the increases and decreases in outstanding quantities within different call ranges to provide investors with a more comprehensive picture.
Therefore, investors should not observe one single data and should consider the outstanding distribution chart and money flow together, so as to draw a conclusion that can better reflect the true intention of investors.