There has been some bullish options trading activity in an important Exchange-traded fund that tracks the Japanese stock market even as the country’s market falls to its lowest level since 1987.

OptionMONSTER’s Heat Seeker tracking system detected a giant upside trade on the iShares MSCI Japan Index (NYSE: EWJ), which tracks the country’s equity prices. About 115,000 EWJ April 8 Puts were sold for 10 cents and an equal number of EWJ April 11 Calls were bought for 14 cents, resulting in a cost of four cents.

Volume was more than 12 times the 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 .6% to $9.98 in afternoon trading, rebounding from an 8% 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 calls1 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.

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