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Mar 07 - 03:55 AM

USD/JPY - Option Price Rally Reaps Rewards Before Any BoJ Move

By Richard Pace  —  Mar 07 - 02:40 AM
  • Talk of March BoJ rate move boosted JPY and JPY FX option premiums this week

  • Implied volatility is significantly higher - rewards those who bought early

  • Benchmark 1-month from 7.5 to 9.1 - 265 JPY pips to 322 JPY pips premium

  • Straddle trade on typical $30-million would have made $115,000 profit so far

  • Large USD/JPY cash long positioning leaves USD/JPY downside vulnerable

  • Would expect more option buyers on vol dips as March 19 BoJ meeting looms

  • Related nL5N3FK3VI

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary

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