Asahi Mutual Life Insurance, one of Japan's largest insurers, is considering increasing its use of over-the-counter equity options in the wake of a continued slump in the cash equity market. "Management will decide on this plan in April," said Masato Fujimaru, portfolio manager in Tokyo, adding that after the fiscal year ends in March, the insurer will decide on a course of action for the equity portfolio.
One plan is to boost the outstanding volume of index options from the JPY1 billion (USD7.5 million) now outstanding to JPY10-20 billion in its JPY1 trillion domestic equity portfolio. The insurer typically buys OTC puts on the Nikkei 225 index or sells calls to generate premium. The maturity of the options will be one to six months, Fujimaru continued.
