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Trade sees big move in Japan ETF

Chris McKhann (chris.mckhann@optionmonster.com)

A large trader is counting on a big move up or down by the iShares MSCI Japan Index Fund.

optionMONSTER's Depth Charge system detected the purchase of 45,000 August 11 puts for the ask price of $0.06 yesterday. This is clearly a new position, as its volume was far above the strike's open interest of 8,854 contracts before the trade appeared.

About two minutes later, a block of 495,000 EWJ shares was bought for $12.1009. The combination of stock and options creates a delta-neutral position , meaning that the trader is looking for shares to move sharply in either direction with higher volatility . (See our Education section)

The EWJ, which has certainly seen its fair share of volatility in recent months, was up 0.5 percent to $12.04 yesterday--its highest close since May 22. The exchange-traded fund fell more than $2 in the next two weeks as Japanese stocks plunged, and but it has been climbing since then.

More than 95,500 EWJ options changed hands overall yesterday, compared to the daily average of fewer than 28,000 in the last month.

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