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Big trader seeks to make millions on China

Emerging market action

Even as investors get concerned about China, one options trader is betting that Chinese stocks are going to get much better very quickly.

On Wednesday, as both the Emerging Markets ETF (EEM) and the China Large-Cap ETF (FXI) saw call volume double their average daily volume, one trader made a substantial wager that the FXI will rise 5 percent by the end of February.

Specifically, this trader bought 25,000 February 37-strike calls expiring on Feb. 28 for 37 cents, in a trade that cost a total of $925,000.

What is impressive about this trade is the conviction it implies. This trade will not make money unless the FXI is above $37.37 on Feb. 28, and if it closes below $37, then the entire premium paid will be lost.

(Read more: China factory activity slows to 7-month low)

Adam Young | Flickr | Getty Images

In exchange for this risk, the trade packs a lot of upside potential: For that 37 cents a share, the upside is uncapped. For instance, if the FXI gets back to the $40 level it saw in early December, this trader will net $6.5 million.

"Someone was making a really bullish near-term bet," said Dan Nathan of RiskReversal.com. But "this is a low-premium way to kind of make a bullish bet with defined risk."

(Read more: Can China protect its prized 7% growth level?)

Concern about China have been mounting. Most recently, its flash Markit/HSBC Purchasing Managers' Index fell to a seven-month low, indicating that manufacturing activity is slowing.

—By CNBC's Alex Rosenberg. Follow him on Twitter: @CNBCAlex.

Follow the show on Twitter: @CNBCOptions.