• USD/JPY implied volatility and JPY call options in demand for weeks

• Implied volatility gauges realised volatility expectations for premiums

• JPY calls give holders the right to buy JPY/sell USD on a future date

• Implied vol and JPY call premiums measured by risk reversals are 2025 highs

• Demand for outright downside strikes continues too - many via call spreads

• Big barriers reside at 145.00 and can provide support near term

• Traders have been buying strikes as low as 140.00 with 3-month expiries

• Recent stock weakness/risk aversion fuelling demand for these options

• FX options wrap
USD/JPY FXO implied volatility


USD/JPY risk reversals

(Richard Pace is a Reuters market analyst. The views expressed are his own)