WisdomTree Japan Hedged Equity (NYSEArca: DXJ) has soared to its highest level since the financial crisis with the Bank of Japan pulling out all the stops to drive inflation and weaken the yen.

DXJ is up 40% since November 2012 and one options trader is positioning for further strength in the ETF, which invests in Japanese stocks but hedges its currency exposure to the yen. The db-X MSCI Japan Currency-Hedged Equity Fund (NYSEArca: DBJP) follows a similar strategy.

A trader on Friday purchased a large block of DXJ calls looking for the ETF to gain another 7% or more by mid-May, according to an OptionMonster report on CNBC.com.

Japanese stocks soared and the yen plunged last week after the BOJ unveiled a bold new plan to fight deflation and stimulate the economy.

The central bank said it plans to double its holdings of government bonds and ETFs the next two years. Bank of Japan Governor Haruhiko Kuroda said he will do whatever it takes to meet the 2% inflation target. [BOJ Bombshell: Yen ETF Plummets, Japan Stocks Soar]

“Considering that inflation since prime minister Shinzo Abe entered office has sent the Nikkei roaring to multi-year highs, Japanese stocks are poised to soar even higher on this far more aggressive move,” reports Dan Carroll for the Motley Fool.

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