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Want to bet on Russia? Then do this, pros advise

Russian stocks have staged a comeback over the last three sessions, as concerns about the situation in Ukraine, and about the consequent sanctions, have lessened. But while investment experts say that getting in on the Russian market could be a good move, they say that reducing risk is a must.

"I like making a bullish bet here, because this is one of those situations where you actually do have really cheap stocks because everybody's so panicked," said Michael Khouw, primary strategist at Dash Financial.

He advises buying a call option, which gives its owner the right (but not the obligation) to buy a stock at a given price in a given time frame, on the Market Vector Russia ETF (ticker symbol: RSX).

"Getting an option gives you a little bit of leverage without actually taking the risk of going out and buying it," Khouw pointed out on Friday's "Options Action."

Stacey Gilbert, senior options trader for Susquehanna, agrees.

"If you're interested in getting long Russia, if you think that there is potentially a rebound here, one of the things I would consider is, I would consider options," Gilbert said. "There are so many different moving parts right now in Russia, between the various sanctions, just the geopolitical issues—I'm much more comfortable using options."

While the Russia ETF has now risen more than 4 percent in three sessions, it's still down 10 percent in a month.

An employee looks at a stock price index graph showing plunging stock prices on an electronic information screen at the headquarters of the Micex-RTS Moscow Exchange.
Andrey Rudakov | Bloomberg | Getty Images
An employee looks at a stock price index graph showing plunging stock prices on an electronic information screen at the headquarters of the Micex-RTS Moscow Exchange.

Back in March, White House spokesman Jay Carney (who has since stepped down) advised, "I wouldn't, if I were you, invest in Russian equities right now—unless you're going short." The ETF is up slightly from the day those comments were made.

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Khouw points out that on a price-to-earning basis, Russian stocks look especially cheap. While the P/E on U.S. equities has risen from 13.5 to 17.5 over the past three years, the P/E on Russian stocks has stayed put at 5.5.

"I know that a lot of value investors who play in emerging markets are looking at situations like Russia, where stocks are this cheap," he said. "There are not a lot of places where you can go and purchase financial assets at less than six times earnings right now."

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And options are not expensive either. The prices of options, as measured by implied volatility (or, the size of the moves that options prices are baking in), has not risen incredibly high.

Implied volatility "has increased, as you would expect it to," and "it's on the higher side of where we've seen over the last two years," but "it's below average of what we've seen over the last five years," Gilbert said.

Given that Russian stocks appear cheap by certain measures, and options themselves are not especially expensive, the case for buying bullish call options on the Russia ETF seems clear.

And in terms of the specific trade she recommends, Gilbert advises buying the Sept. 25-strike call for about 50 cents.

Read MoreIs now the time investors should move to cash?

—By CNBC's Alex Rosenberg

Follow the show on Twitter: @CNBCOptions.

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