Markets

Bulls see Japanese stocks near bottom

Even as the Japanese market falls to its lowest levels since 1987, some activity has turned bullish in a key exchange-traded fund that tracks its stocks.

optionMONSTER's Heat Seeker tracking system detected a giant upside trade on the iShares MSCI Japan Index ( EWJ ) exchange-traded fund, which tracks the country's equity prices. About 115,000 April 8 puts were sold for $0.10 and an equal number of April 11 calls were bought for $0.14, resulting in a cost of $0.04.

Volume was more than 12 times open interest in both strikes, and it was the largest trade to cross our monitoring systems so far today.

The resulting position will simulate ownership in EWJ, earning money if the fund pushes toward or above $11 by expiration and losing money below $8. If it's between those two levels on expiration, the calls and puts will both expire worthless.

EWJ is down 0.60 percent to $9.98 in afternoon trading, rebounding from an 8 percent loss earlier in the session. It bounced around the same level where it bottomed out last summer.

There was also heavy volatility selling yesterday as investors wrote long-term calls betting that the fund will remain below its 2011 highs.

Overall option volume in the fund is 38 times greater than average so far today.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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