Emerging Markets -We wrote yesterday of "sell in May and go away," here are some additional thoughts on lateral ways to protect your positions and portfolio without overpaying for volatility. Emerging-marketsWe mentioned the correlations between the Russel 2000 Index (IWM, quote) and MSCI Emerging Markets Index (EEM, quote).  The good news for hedging Emerging Markets directly right now is that Emerging Markets equity (EEM) puts are at trading cheaper than 6 weeks ago on the back of improved Emerging Markets sentiment.

Buy (relatively) cheap volatility directly. 

Also look at buying volatility in Korea (EWY, quote) where we see deep, liquid derivatives and index futures markets that support more efficient trading.  Korea gives investors a solid proxy for global industrial activity and China related export growth (contraction).

As Russian headlines get uglier today with the elevated risk of Ukraine being drawn into the conflict, we would prefer to play Russian volatility via European equities (EuroStox50, DAX) where high correlations and lower volatility are cheaper plays. 

DAX puts (EWG, quote) will give you Emerging Market macro coverage and contagion into Europe fears that Russia is driving...

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