(April 9): Chinese stock investors should consider using “cheap options” as safer ways to seize gains in the country’s potential cyclical upturn, according to JPMorgan Chase & Co.

The brokerage’s strategists, including Tony SK Lee, favour buying options on larger-cap indices to position for a potential rebound in Chinese stocks, according to their note issued on Monday. Specific trade recommendations include buying a narrow call spread on H-shares or FTSE China A50, and buying a Chinese equities call, contingent on the US dollar not falling against the Chinese offshore yuan.

Investors are turning more optimistic about the world’s second-largest economy, after China’s official manufacturing data registered the highest reading in a year, the latest economic green shoot alongside strong exports and rising consumer prices. Robust manufacturing, combined with a return of foreign inflows and Beijing’s resolve to rescue the market, has helped the CSI 300 Index rebound 11% from a February low.

Still, given the challenges in China’s growth outlook, “it’s premature to re-enter the market solely based on improving economic activity”, the strategists wrote. They prefer large-cap equities that are supported by corporate buy-backs and buying from China’s state-backed funds.