$EWJ call buyers score

Bullish option positions opened in the iShares MSCI Japan Fund (EWJ) last month were paying traders handsomely this session.

On Aug. 24, Market Rebellion’s Unusual Activity Service found that 34,000 December $73 calls were bought for $0.46 as part of a bullish spread, above the previous open interest of 107 contracts, with shares at $68.02.

Those calls traded for $3.60 today, more than 7.5 times their purchase price. The stock rose by as much as 8.5% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

EWJ ended the session higher by 1.37% at $73.81 today. The exchange-traded-fund, which tracks a basket of Japanese equities, set a new high during today’s trade.