The wild swings of the Chinese mainland market via ASHR CSI 300 China A-Shares ETF in 2015 have reserved a special place on my watch list. In essence, Chinese traders with new access to capital and leverage pushed up valuations of Chinese stocks, followed by 3 major collapses in price and government intervention finally stabilizing markets. This may become interesting again.

Watching the growing leverage in the Chinese economy via PBOC policy, draining foreign exchange reserves, and depreciation of the Yuan, I was waiting for things to become interesting again. An article on Bloomberg caught my eye causing a revisit of the story. It seems like volatility is visibly rising again, and may reward put option buyers.

ASHR V&P

 

I won’t be speculating on this one, and valuations on the Shenzhen still have ample room to decline, but a fearful spike in volatility will provide opportunities to write straddles/iron butterflies/naked puts.