In Battered China Stocks, ‘Lottery Ticket’ Trades Gain Favor (2)

In the wreckage of China’s stock-market meltdown, some traders are making long-shot bets that officials in Beijing can stoke a recovery.

They’re finding moments to snap up options tied to US-listed exchange-traded funds that track Chinese equities, which have been whipsawed by Covid lockdowns, regulatory pressure and a property crisis. It’s evidence that some traders – who’ve seen shares from Beijing to Hong Kong slump 60% from a 2021 peak – want to be able to capture the upside for the stocks, just in case the government eventually succeeds in stoking a rebound.

“It’s simply buying cheap lottery tickets with ...