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May 14, 2013  Tue 3:47 AM CT

A huge trade is looking for higher volatility in the iShares Japan Fund, which hit a five-year high yesterday.

optionMONSTER systems show that 25,000 September 11 puts were bought for the ask price of $0.24 yesterday. The volume was 5 times the strike's previous open interest, clearly indicating that this is new activity.

The trader may have been opening this new position while rolling out of the June 11 puts, where 16,000 contracts traded for $0.05 against open interest of 128,659 a few minutes later.

In that same time period, a block of 500,000 shares of the EWJ were bought for $11.94. The combination of stock and option activity would create a delta-neutral strategy would profit from a rise in volatility and/or a big move in either direction. (See our Education section)

The EWJ was up 1.3 percent to $11.91 yesterday, its highest close since August 2008. The exchange-traded fund has been on an incredible run from below $9 in November and has closed below its 20-day moving average only twice since January.
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