The Bank of Japan is set to conclude its two-day monetary policy meeting on Wednesday, and one trader is gearing up for a rally in Japanese equities.
"I'm looking for ways to play for upside ahead of the Bank of Japan meetings, while limiting my downside risk," said Stacey Gilbert, head of derivative strategy at Susquehanna. Specifically, Gilbert turned to DXJ options for opportunity. The DXJ is a hedged Japanese equity fund, which removes currency exposure.
The DXJ is up roughly 18 percent over the past year, and in October of 2014, the ETF saw a 6 percent pop when the BOJ did a surprise easing. "The Bank of Japan is set to meet [this week] and again on April 30. And there is much debate if there will be any additional easing," said Gilbert on Monday's "Trading Nation." "I'm looking to the options market in case there is surprise easing, or more importantly as the general sentiment shifts and becomes more bullish on Japan."