Hedge funds pile into Japan dispersion trade
Recent increase in single stock option issuance driving the market in dispersion trading
Increasing retail appetite for single stock uridashi structured products in Japan has driven a spike in dispersion trading by hedge funds as dealers look to the sector as a way to hedge their long vega positions.
The 2013 bull market phase of Abenomics saw the benchmark Nikkei and Topix indexes rise by more than 70%, whereas this year they are both roughly flat following a period of volatility early in 2014. However, some single stocks have continued to flourish – particularly those with an
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