​BoJ-Linked Nikkei Opportunities Seeing Greater Challenges

Trading Nikkei 225 volatility is becoming increasingly difficult as the Bank of Japan’s motivations become less clear, following a spate of inaction during the last few meetings. According to one volatility portfolio manager in the Asia Pacific region, recent BoJ meetings had disappointed those playing Nikkei volatility. Those positioning for a Nikkei rally with upside calls are obviously feeling the pain of continued BoJ inaction, while trades that take advantage of the BoJ disappointing, such as buying Nikkei skew, are becoming more difficult to execute and are being squeezed as they become crowded, the manager added.