Kevin Kelly Discusses Option Strategy For WisdomTree Japan Hedged Equity Fund
While Japan is yet again flirting with recession, the Street is seeing it as a positive for Japanese equities owing to the possible devaluation in Yen that will occur in the near future.
Kevin Kelly, Derivatives Strategist at Recon Capital Partners, was recently on Bloomberg to discuss his take on Japanese economy and how U.S. investors can get exposure to it by placing their bets on Options of WisdomTree Japan Hedged Equity Fund (NYSE: DXJ).
"Investors are really looking to Japan because they think there is going to be big growth there right, so Yen is going to weaken so you are going to see exports go up. So one of the trades to look at is buy May 2015, 55 [strike] Call on the DXJ," Kelly said.
Kelly went on to explain that DXJ is a Japan hedged equity ETF. As investors based in the United States cannot get direct exposure to Japanese equities, playing the DXJ, according to Kelly, is the best possible option for them to get exposure to Japanese equities.
Kelly explained that the DXJ tracks an index made up of diverse dividend paying stocks from Japan. He also highlighted that the Japanese government has recently increased the exposure of its pension fund, which incidentally is the largest government owned pension fund in the world, to equities from 12 percent to 25 percent.
Kelly quoted trading figures from Monday to explain his bullish position; 3.5 times more call options of DXJ ETF were purchased than put options on Monday when the ETF was down 1.5 percent on back of big announcement from Japanese government.
DXJ closed Tuesday at $54.64, up 1.4 percent.
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