EWJ is traded at 8.65 and June $8 Call is traded at 0.9. EWJ is pretty stable but you can get about 40% by going long considering the fact that there are 8 weeks left to expiry. Risk reward ratio is excellent.
EWJ is not that volatile and you are "almost" risking only 20 cents because 70 cents is in the money (I know that actually you risk the whole 90 cents. If 90 cents goes to 1.35, that means EWJ hits 9.20, you will get 40%. You have 8 weeks for this to happen. almost 3 days like today. All things said, there is no guarantee for anything in trading.
Just a quick eyeball (rather than actually calculating it) suggests that the correlation between EWJ and SPY in recent time is upwards of 90%. In that case, why not use the more liquid 80 SPY call as your vehicle?
I have to check that. To be honest, I bought the calls at 0.8 and now it is up about 13% but that is really boring trade. No excitement but safe (read "safe" with a grain of salt !). The $8 call is also not that highly traded and there is a 5 cent spread between bid and ask so this trade is good for very patient traders.
I just checked that. You are absolutely right. 90% correlation. Considering the liquidity of SPY's option, it makes sense to go with SPY.