**WisdomTree Japan Hedged Equity Fund Overview** The WisdomTree Japan Hedged Equity Fund (DXJ) has over $4.12 billion in assets and aims to mirror the performance of the WisdomTree Japan Hedged Equity Index. This allows investors to engage with the Japanese stock market while minimizing the impact of currency swings between the yen and the U.S. dollar. DXJ has annual operating costs of 0.48%, which is in line with similar funds. It features a 12-month dividend yield of 3.29%. Its major holdings include the U.S. dollar, which makes up 53.79% of total assets, as well as various financial companies. Regarding its performance, DXJ has risen by 21.75% this year and 25.8% over the last year. The fund’s price has fluctuated between $95.74 and $133.17 in the past year, with a beta of 0.41 and a standard deviation of 19.46% over three years. It includes about 436 different stocks, which helps spread out risk related to individual companies. Other options for investors are the JPMorgan BetaBuilders Japan ETF (BBJP) and the iShares MSCI Japan ETF (EWJ), which have $14.21 billion and $15.59 billion in assets respectively. These alternatives come with different costs and risk profiles. **Bullish Strategies with Derivatives** With a 25.8% increase in the past year, DXJ shows strong upward momentum, making it a good candidate for bullish derivative strategies. The three-year standard deviation of 19.46% suggests that options on DXJ may have moderate premiums. Traders might want to consider purchasing call options to bet on further gains, especially during short-term price drops. A key benefit of DXJ is its currency hedge, which protects against movements in the Japanese yen relative to the U.S. dollar. This allows investors to focus on the Japanese stock market without worrying about fluctuating currency values. Our attention should primarily be on Japan’s corporate profits and economic conditions, rather than the USD/JPY exchange rate. This is especially relevant in October 2025, as the interest rates differ significantly between the Bank of Japan and the Federal Reserve. The BoJ keeps its key rate at 0.1%, while the Fed’s rate is around 4.75%. This puts ongoing pressure on the yen, enhancing the value of the hedge. Unhedged Japanese ETFs have not performed well due to currency translation losses. We’ve seen similar scenarios from 2013 to 2015, when a weak yen positively impacted Japanese corporate profits and DXJ’s performance. With momentum strong now, selling cash-secured puts at prices lower than the current market level might be an effective approach. This strategy allows investors to collect premiums while setting a lower purchase price if the market dips. DXJ’s low beta of 0.41 indicates it is less volatile than the overall U.S. market, making it a good option for diversification. We should compare the implied volatility in the options market with the historical 19.46% figure. If implied volatility is currently high due to recent gains, strategies like selling covered calls could provide additional income. Create your live VT Markets account and start trading now.

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