With the recent launch of cash-settled options on FTSE China 50 Mini-Index (Ticker: FXTM), traders have an opportunity to express a view on the Chinese market or movement in volatility is available.
Based on 50 of the largest and most liquid Chinese stocks (H Shares, Red Chips, and P Chips) trading in Hong Kong, cash-settled options on the FTSE China 50 Mini-Index is now listed on CBOE.
FTSE China 50 Index Price & Volatility
FTSE China 50 Index price movement changes on a monthly basis is typically 1% or greater (85% over last 3 years). Although the index is down -7.51% y.t.d. the monthly gyrations in the first 4 months have ranged from -13.8% (Jan.) to +11.1% (Mar.).
The 30 Day Historical Volatility averaged 21.98 over the last 3 years. So far in 2016, the range has been a low 18.85 to a high 40.01. Currently at 20.74.
Trading around Chinese Economic Releases:
The previous movement of the FTSE Chinese 50 Index around the dates of Chinese Economic releases such as Exports, GDP Annualized Growth YoY, Industrial Production, etc. have been significant as seen in the chart below.
Chinese Economic Calendar – A Week Ahead:
Volatility Trading Opportunity – FXTM
Over the last 4 days FXTM has dropped -4.7% recently trading below the 50 day moving average. Both technically and fundamentally this might be an interesting opportunity to look at a long FXTM volatility trade (i.e. Straddles, Strangles).
For additional information on FXTM please visit www.cboe.com/FXTM