• USD/JPY's slide from 158.00 met strong demand after basing at 156.83 on Thursday - possibly option related

• A massive $2.8 billion 156.90-157.00 FX option strikes expire at the 10-am New York cut (14GMT) Thursday

• Related hedging flows are likely to be limiting deeper declines ahead of the expiry time, more 157s expire Friday

• Implied volatility surged as USD/JPY fell - 1-month from 7.15 to 7.65, but has been trading 7.6-7.55 as spot settles

• Risk reversals increase JPY call over put premiums - 2-week paid 2.2 and 1-month regains 2.0 from 1.9 JPY calls

• Dealers also report a pick up in downside strike demand, so traders more wary of any deeper FX declines

• Related comment - October Fed flashes on FX options radar
JPY option expiry strikes

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