I spoke with Reuters’ Saqib Iqbal Ahmed about the risks and potential returns of investing in Greek stocks via the Global X Greece 20 ETF (GREK):
Political turmoil in Greece has hit its financial markets hard, and traders in the U.S. options market are positioning for a further fall in Greek stocks as the country heads to a snap election that could determine whether it leaves the euro zone.
There are few choices for investors who want narrow exposure to Greece in U.S. markets, but one, the Global X FTSE Greece 20 exchange traded fund, which tracks the Greek equity market, has seen more active trading in the options market as traders position for more upheaval.
The ETF has fallen about 50 percent since early March 2014 and hit a two-year low of $12.05 on Jan. 8. Since December alone, the ETF has lost 20 percent, and daily put activity – bets on the market continuing to fall – has tripled in the last two weeks…
Of course, with these declines, a brave investor could go in the other direction.
“For an investor wanting a high-risk/potentially high-return trade, I would say going long Greek stocks makes sense,” said Charles Sizemore, chief investment officer at Sizemore Capital Management.
“If cooler heads prevail and Greece avoids a messy exit, Greek stocks are a bargain,” he said. “But this is also one of those trades where you could lose half your money in a hurry if political events slide out of control.”