Callable Bull and Bear Contract (CBBC) is issued by investment banks and is traded on HK Stock Exchange through the Third Generation Automatic Order Matching and Execution System (AMS/3). It is traded with T+2 settlement days. Investors can invest CBBC with their securities accounts or through stock brokers. 
Features of CBBC include:
    • Has Gearing Effect 
    • Processes Mandatory Call Event 
    • When R-type CBBC is called, investors may receive residual value ; when N-type CBBC is called, investors would not receive any residual value
Bull contractWhen the price of a particular underlying asset increases (most of the CBBCs are linked with indices or stocks but they may also be linked with different asset class or commodities), the theoretical price of that Bull contract will also increase. If investors are positive on a particular underlying asset, they may consider Bull contracts. When Bull contract price goes up, investors may sell the Bull contracts and make profit with the price difference.  Bear contractContrary to Bull contracts, if investors are negative on a particular underlying asset, they may consider Bear contracts. When the price of a particular underlying asset decreases, the theoretical price of that Bear contract will increase. Investors may sell the Bear contracts when the price of it moves up and make profit with the price difference.    
Gearing effect

CBBC is a leveraged product. Investors only require outlaying a small proportion of the underlying spot price to obtain a multiplied potential profit via price change of the underlying asset. In general, the CBBC price movement is calculated by Effective Gearing. Since effective gearing is calculated in multiple times, CBBC price increment would be greater than that of its underlying asset, and thus CBBC price decrement would also be greater. As a result, the risks involved are also greater.