【New Gold and Silver Warrants Launch】What's the real reason for gold's decline amid US-Iran conflict? SocGen's Keith teaches you Call/Put strategies + Time value interpretation

Olga：
Welcome to today's "Warrant Practical Strategy"! I'm Duan Jie.
Today we are honored to have Keith, Head of Listed Products Sales at Societe Generale Securities, with us. Hello!
Keith：
Hello everyone! Hello everyone!
Olga：
The market is currently heavily influenced by external news. I'd like to first ask Keith for his view on gold.
Last time you explained oil very thoroughly, so today I want to start by asking about the investment logic for gold.
Although we see some rebound in gold today, many friends actually don't understand this wave of movement.
People originally thought to buy gold when conflicts escalate, but gold performed relatively weakly during the conflict.
Now, if the conflict eases, will it return to its previous investment logic?
This is a question many friends have been concerned about recently.
Also, I know you just launched several warrant products linked to the gold price last week. Could you briefly introduce them to everyone?

Keith：
Yes, last week we issued some warrants linked to gold.
Over the past few months, the gold price has risen all the way to over $5,000 per ounce, attracting a lot of investor attention. So we hope to provide more tools to make it easier for everyone to deploy exposure to gold volatility.
Before talking about the products, let me briefly discuss the recent gold price movement.
Gold started to rebound yesterday and today, but before that, it fell consecutively for about 9 to 10 days from above $5,000.
The main reasons are a few points:

The escalation of the US-Iran situation made the market worry about oil supply disruption. Rising oil prices pushed up inflation expectations, leading people to focus on whether central banks would raise interest rates.
A lot of capital flowed to the US dollar for safety. A stronger dollar put pressure on gold, which is priced in dollars.
Gold itself pays no interest. When the market worries that interest rates might rise, the opportunity cost of holding gold increases, leading some investors to take profits or reduce holdings.
The result was a noticeable pullback in the gold price.
However, the situation changed this week. The US President first said he would demand Iran open the Strait of Hormuz within 48 hours, causing a market plunge. Later, he changed his statement to a 5-day delay and indicated progress in talks with Iran. Stocks rebounded, oil prices fell back, and gold also recovered to around $4,200, rising another ~2% this morning.

Olga：
What are the advantages of the newly launched warrant products?
Keith：
As a commodity, gold has prices 24/7. The most traditional way is, of course, to buy physical gold bars or gold grains.
But physical gold is volatile, making it inconvenient for short-term trading.
In recent years, many investors want to add gold exposure to their portfolios. The simplest way is to buy a gold ETF (e.g., 2840).
If you want leverage or want to take a bearish view, it's more difficult. Most people used to use margin trading, but now it's common for gold prices to fluctuate 5–9% in a day, making margin trading very risky.
Therefore, last week we launched gold Call/Put warrants directly linked to the gold price (not the ETF). Investors can buy and sell them during normal exchange hours using their stock accounts, which is very convenient.
Examples of the currently launched products:

Call warrant (11099): Strike price 5,600 and 6,200 (expiring in September)
Put warrant (11100): Strike price 4,400 (expiring in September)
The actual leverage of these products is roughly between 5.5x to 7.5x.
Olga：
When many friends look at 2840, they often feel the ETF price is different from the gold price (USD/ounce) we hear in the daily news. What's the biggest advantage of your products directly linked to the gold price?
Keith：
That's one very important reason. The underlying for our products this time is the real gold spot price (LBMA London Fix), code XAUFIXAM, or simply "Gold", not an ETF.
What investors care about daily is "how many dollars per ounce". Our strike prices (e.g., 5,600, 6,200) use the same unit, which feels very intuitive and easy to understand.
Also, importantly, for investors who want to take a bearish view on gold, there aren't many Put options in the market. Our Put warrants provide a tool to short on a transparent exchange platform and can also be used to hedge physical gold holdings.

Olga：
A viewer asks: How to judge if the price of these warrants is reasonable?
Keith：
This is a very important question. The essence of a warrant is an Option.
Take one of our Call warrants (11099) as an example:

Strike price $6,200
Current gold price around $4,300–$4,600 → It's Out-of-the-Money, with no Intrinsic Value
Current price around 0.087 → What you're buying is "Time Value", i.e., the chance that the gold price could rise above $6,200 in the next 6 months.
The longer the time and the higher the underlying volatility, the higher the time value.
But as time passes, if the gold price doesn't rise significantly, the time value will gradually decay (Theta decay).
The website also has a theoretical price calculator. You can input different gold prices to simulate the theoretical value.

Olga：
Besides gold, you recently launched silver warrants and US stock-related products. Could you briefly introduce them?
Keith：
Yes, yesterday we launched the first silver warrants (Call & Put) in the Hong Kong market, with strike prices of $90 and $59 respectively, expiring on September 28th. Silver is more volatile than gold, so everyone needs to pay special attention to the risks when using them.
Also, for US stocks, we newly listed Call and Put warrants for Micron (MU) yesterday, making it convenient to deploy US stock positions during Hong Kong trading hours.$Micron Tech(MU.US)

Olga：
Finally, a quick question about the Hong Kong stock market. Regarding individual stocks, viewers are asking about Xiaomi and CNOOC.$XIAOMI-W(01810.HK) $CNOOC(00883.HK)
Keith：
In the past two days, capital flows in the Hong Kong market have been clearly flowing into products bullish on the Hang Seng Index. However, after the Hang Seng Index rebounded yesterday, some capital has already taken profits and exited, while some capital has started buying bear certificates to bet on a decline.
Although Xiaomi released its results, the stock price hasn't reacted much for now, staying around HK$30. In the short term, watch to see if HK$30 provides support.
CNOOC is clearly affected by oil prices. Oil prices fell back in the past two days due to negotiation news, and the stock price adjusted accordingly. Short-term deployment needs to pay special attention to oil price movements and Iran's response.