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How To Trade Japanese Equities Market Using Options

May 31, 2013

Japanese stock markets have experienced tremendous run. +80% in 6 months! That’s a raging bull, one of a kind, for any developed market in recent times. Having run up so much, Nikkei has quickly turned down and is technically close to bear market having dropped 15% from recent high just a week ago. Implied volatilities have jumped significantly indicating uncertainty amongst market participants.

If you don’t have access to international brokers and/or futures, there are various alternatives that you can use to trade your DIRECTIONAL or NON_DIRECTIONAL  view of the Japanese equities market and also benefit from increase implied volatilities. Here is a list of Japan focused equities style underlyings that one, with a normal US trading account, can trade.

JapanFocused List

JapanFocused List, Source- Google Finance

You may choose Ultra short like EWV, plain vanilla underlying or via options. Some of these underlying have liquid options as well e.g. DXJ which is a Wisdom Tree Japan Hedged Equity fund has ample liquidity with relatively tight bid/ask spread. Before you start trading on these, please find more information and understand how these work. Do you due diligence before spending even a single dollar based on above information.

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If you are not so sure you how to trade using option, check out this section containing numerous examples of strategies and detailed explanation.

Disclaimer– As of this writing, I have bearish positions on Japan. But I may change my positions any time without publishing any prior notice.

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