

China’s stock markets and revisiting 2011 predictions - mooreds
http://blog.mpettis.com/2015/07/chinas-stock-markets-and-revisiting-2011-predictions/

======
noname123
Great article. I'm curious if peeps in North America are actively considering
trading the situation in China.

What surprised me is when I looked into the implied volatility on FXI, the ETF
for US market to look to trade large caps in China is only at 27%.

To put things in perspective, S&P500 Index implied volatility is at 10%.
Google's IV is at 21%. Tesla Motors's IV is at 45%. Very weird when I expect
the down-swings in China would put the IV at a much higher level.

So my thesis is that the IV on Chinese market is undervalued relative to SPY,
buying a straddle on FXI (long vol in China) and selling a strangle/calendar
on SPY IMO (short vol in US) is IMO a viable idea.

Curious if any peeps have any other ideas?

~~~
johnloeber
While I think your analysis is poignant, I am befuddled by your use of the
colloquialism "peeps."

I note that the FXI statistic isn't that surprising -- the hardest-hit Chinese
stocks were small- and mid-cap. FXI tracks large-caps, which were not quite as
affected.

