The threshold for individual investors looking to invest in single-stock leverage products will increase starting tomorrow.
According to the Financial Services Commission, the Korea Exchange will expand its simulated trading service, currently applied to futures, options, and short selling, to include domestic and foreign single-stock leverage investments beginning on the 19th. Individual investors will be required to engage in simulated trading for at least five trading days, with a minimum of one hour per day, totaling at least five hours.
Previously, to invest in single-stock leverage products, investors had to complete two hours of online training, including both basic and advanced courses, and maintain a minimum deposit of 30 million won. This new requirement adds a simulated trading procedure that mimics real investment conditions.
The financial authorities are continuously strengthening investor protection measures, considering the risks associated with single-stock leverage products. These products are structured to track the daily returns of underlying assets at a certain multiple, which can lead to rapidly increasing losses as stock price volatility rises.
Recently, individual investor funds have been flowing into U.S. indices and covered call products in the exchange-traded fund (ETF) market.
According to Koscom ETF CHECK on the 18th, among the top 10 ETFs with the highest net inflows from the 11th to the 13th, four were products tracking major U.S. indices like the S&P 500 and Nasdaq 100. The 'TIGER U.S. S&P 500' saw a net inflow of 212.4 billion won, while 'KODEX U.S. Nasdaq 100' attracted 100 billion won. Additionally, 'KODEX U.S. S&P 500' and 'TIGER U.S. Nasdaq 100' received net inflows of 96.5 billion won and 65.2 billion won, respectively.
When expanding the scope based on individual net purchases, the top two ETFs purchased by individuals from the 3rd to the 17th were 'TIGER U.S. S&P 500' (281.8 billion won) and 'KODEX U.S. Nasdaq 100' (191.1 billion won).
Funds also flowed into covered call ETFs, which seek regular cash flow. From the 11th to the 13th, 'KODEX 200 Target Weekly Covered Call' saw a net inflow of 214.7 billion won, while 'TIGER Semiconductor TOP 10 Covered Call Active' and 'RISE Korea Value Up Weekly Fixed Covered Call' attracted 74.5 billion won and 42.4 billion won, respectively.
Covered call strategies involve holding stocks or indices while selling call options to utilize the premiums received for dividends and other purposes. This approach allows investors to seek cash flow and reduce volatility while sacrificing some upside potential in a rising market.
Conversely, as the domestic stock market rebounded recently, some leveraged products experienced profit-taking. From the 3rd to the 14th, individuals sold a net 318.6 billion won of 'KODEX KOSDAQ 150 Leverage.' There were also net sales of approximately 220.1 billion won and 251.3 billion won in single-stock leverage products for Samsung Electronics and SK Hynix, respectively.
* This article has been translated by AI.
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