If options are one way to measure sentiment, confidence is returning to Japan's stock market as investors prepare for the next phase of Prime Minister Shinzo Abe's growth strategy.

The Nikkei Stock Average Volatility Index, a gauge of option costs, touched its lowest since January 2013 on May 15, data show. The index slumped 37 percent from this year's high in February through last Friday, with the premium to its U.S. counterpart narrowing 32 percent.

Investors in the Nikkei 225 stock average enjoyed the developed world's biggest rally last year with a 57 percent surge, and are now enduring its steepest slump. Abe's revamped growth initiatives due in June will test his reform agenda known as "Abenomics," which started with radical monetary stimulus, the usual massive public spending and vows of structural reform.