China ETF
China has clearly emerged as an economic superpower. China’s activities have a direct effect on economies, businesses and governments worldwide. The businesses and stocks of Chinese companies are highly followed globally, and may even be in your own portfolio. Can conservative option sellers exploit this? Can a China ETF have a place as a trading vehicle in a safe-options-traders’ game-plan? Let’s explore this a bit after we review the Chinese economic landscape. Over the past several decades, China has moved beyond strict communism and even embraced capitalism. China’s economy is now the world’s second-largest - displacing Japan’s - behind the US economy. Consequently, many Chinese economic decisions now have a profound effect on the world’s marketplaces. Much of China’s expansion is a result of its ability to manufacture goods at an extremely low cost. Exporting across the globe, its economy has fared well even amidst the recent recession. Some even argue that China has kept the world from going into a major depression. Because of its economic strength, the country's influence has expanded in other related areas as well: certainly in the political realm, but also in the foreign currency arena, in its demand for natural resources, and in the rising power of its own citizenry as they collectively rise from poverty. Thus, China appears poised be a major player on the global scene for many years to come. One of the best ways to establish a diversified position in Chinese stocks is through a China ETF. These are a number to choose from: Market Vectors China (PEK), SPDR S&P China (GXC), iShares FTSE/Xinhua China 25 (FXI), Guggenheim China All-Cap (YAO) and Guggenheim China Real Estate (TAO) are some of the more established ETFs in the China space. With the exception of PEK, the above ETFs have listed options, making them potential candidates for covered calls, cash-secured puts and other option plays. Keep in mind that although Chinese growth continues to look rosy, these ETFs can be quite volatile. If you do trade these, it would probably be prudent to keep your position size in check.
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