Japan dealers pitch volatility swap trade to keep up with demand for Topix options
Institutions are creating demand for Topix options, outweighing supply
Institutional investors rushing to participate in the rise of Japan's equity markets have generated huge demand for Topix call options but with supply being limited, dealers are pitching hedge funds with a volatility swap trade to hedge their positions.
The radical bond purchasing programme of Japan's new prime minister Shinzo Abe and Bank of Japan governor Haruhiko Kuroda aims to reflate a Japanese economy that has suffered more than a decade of deflation. The plan to inject ¥60 to 70 trillion
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