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Here's Why Soaring Japan Stocks Are Good News for Short Sellers

  • Steepest Nikkei 225 daily gains usually come in bad years
  • Wednesday's 7.7% surge was the gauge's 8th-biggest since 1970
Updated on

For bears who just got burned by the Nikkei 225 Stock Average’s biggest rally since 2008, history should provide some comfort.

In the past week, investors made record short bets on Tokyo shares and options traders paid the most for protection from losses since 2011 -- just in time for the Nikkei 225 to soar 7.7 percent Wednesday. The silver lining for pessimists: of the Japanese measure’s 20 steepest gains from 1970 until Tuesday, 16 came in a year that investors lost money.