Bank of America options strategist and Asia-Pacific stock derivatives research director Lars Naeckter said that the recent surge that has helped Chinese stocks become one of the best globally this year may not be over yet, and there should be further upside potential. This strategist correctly predicted the rise in Chinese stocks earlier.

According to him, many people are positioning themselves for this. Naeckter stated that since China introduced a package of economic stimulus measures, there has been an increase in demand for call bets.

"For Hong Kong stocks, and the Exchange-Traded Funds (ETFs) on U.S. exchanges that track these stocks, the cost of call options relative to put options is close to the highest level since at least 2008."

Although the Hang Seng Index has given back nearly half of its recent gains, Naeckter said that given China's policy shift and investors' willingness to re-enter the market, there is still potential for further rebound in the market.

Meanwhile, the most recent global fund manager monthly survey released by Bank of America also shows that "being long Chinese stocks" ranked in the top 3 in the October survey, with a percentage as high as 14%, second only to "being long the magnificent 7" (43%) in TOP 1 and being long gold (17%) in TOP 2.

In addition, the net proportion of global fund managers expecting a stronger Chinese economy in the next 12 months has reached 48%, the highest level since April 2023.

Naeckter and its team suggest that for companies listed in the usa, $iShares China Large-Cap ETF (FXI.US)$ Adopting a call options strategy. In early September, when the Chinese stock market index approached its low point, Lars Naeckter recommended a call options structure that yielded a return on investment of over 360%.

"Opportunities still exist. With us striking a balance between uncertainty and the ongoing stimulus measures in terms of scope and duration, there is still significant upside potential in this market moving forward," he said in a recent interview.

Like Bank of America, other Wall Street giants also see more potential for returns. Goldman Sachs trading department recommended the Hang Seng corporate options spread and options hedging (buying put options while selling call options) last week to take advantage of the rising implied volatility.

However, this week, jpmorgan's forex and emerging markets head Peter Yip and others pointed out that given the uncertainties surrounding China's stimulus plans, global rate cut prospects, and the U.S. election, there is also an increasing demand for Chinese hedging.

"The market still harbors a certain degree of doubt, which is a good thing because we may not see an overly bullish scenario," Naeckter said.

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