Latest Hong Kong Exchange holding disclosures showed that Duan Yongping’s position in Pop Mart dropped from 7.65% to 5.55%. After the filing became public, online commentary quickly tilted in one direction, arguing that claims of long-term conviction had given way to a sale because the stock had not gone up after a few months.
The source article disputes that reading. Its author says that if Duan had really sold, the reasons would more likely be either a newly discovered problem with Pop Mart or some other special trading arrangement, with the latter seen as the more likely explanation. After checking the matter, the author says the apparent “sale” was likely the result of a derivatives position being exercised by the counterparty.
The reported reduction may reflect an options exercise
According to the article, Duan has often used put selling in past trades to lock in a cheaper purchase price for stocks he wants to own. To explain the idea, the author strips out fees and frictions and uses a simplified example.
Assume Pop Mart is trading at HK$150 and Duan wants to buy one share at HK$140. He then sells a one-year put option with a strike price of HK$140.
By selling that put, he must set aside HK$140 in his trading account and cannot use it during the life of the option. In return, he immediately collects a HK$10 premium. On the other side of the trade, another market participant buys the put and pays that HK$10 premium.
One year later, if Pop Mart has fallen to HK$128, the buyer would have an incentive to exercise. In the article’s example, that person buys one share in the market at HK$128 and sells it to Duan at HK$140. After accounting for the premium paid, the buyer earns HK$2, calculated as 140 - 128 - 10 = 2. Duan, meanwhile, gets to buy Pop Mart at his target price of HK$140.
If the stock is still at HK$150 a year later, the buyer would abandon the option. In that outcome, the buyer loses the HK$10 premium, while Duan keeps the premium and the HK$140 he had set aside is released back to him.
The article’s point is that this structure gives Duan one of two outcomes: either he acquires the stock at the lower target price or he earns the premium without taking delivery. It says this is why he has often used the method in size when trying to build positions at lower prices.
An alternative structure after exchange limits are reached
The piece then says the Hong Kong Exchange has a special restriction on the amount of put selling allowed in Pop Mart-related trading. Once that cap is reached, further put selling is no longer available.
If Duan still wanted to lock in a lower effective purchase price for more Pop Mart shares, the article says he could turn to another structure with a similar economic effect: buying the stock and selling call options against it.
How the buy-stock-and-sell-call structure works
The article keeps the same assumptions. Pop Mart is at HK$150, while Duan wants an effective cost of HK$140.
First, he buys one share at HK$150. Then he sells a call option with a strike price of HK$150. By writing that call, he receives a HK$10 premium, and the share is effectively locked in the account.
At the same time, another participant buys the call and pays the HK$10 premium.
If Pop Mart is still at HK$150 one year later, the call buyer would typically let the option expire. The buyer loses HK$10. Duan still owns the share, and because he received HK$10 upfront, the article treats his effective cost as HK$140 rather than the HK$150 cash price he initially paid.
If the stock rises to HK$162 after a year, the call buyer would exercise. In the article’s example, the buyer acquires the locked share from Duan at HK$150 and then sells it at HK$162, generating a net gain of HK$2 after the premium, or 162 - 150 - 10 = 2.
For Duan, that means the locked Pop Mart share is delivered away and he receives HK$150. On the article’s calculation, he ends up only with the HK$10 premium. In account records, however, the result shows up as a sale of the stock.
The article’s conclusion on the disclosed holding change
The source article says the reduction disclosed in this case fits that second scenario: a call option previously sold by Duan was exercised by the counterparty, leading to shares being transferred out of the account.
In that reading, the holding change does not necessarily indicate a direct bearish turn on Pop Mart. Instead, it reflects the use of relatively complex financial derivatives to lock in a lower effective entry cost.
The author adds that this approach is not well suited to ordinary investors and does not recommend that general investors casually use such complex tools. The article also says Duan himself has previously stated that simple methods are usually best.
The piece closes with a disclaimer that markets carry risk and that the article does not constitute investment advice. Readers should judge whether any opinions or conclusions discussed are appropriate for their own circumstances and bear responsibility for their own investment decisions.