Price action in FX options shows a market with strong concerns about the USD/JPY reaction to the BoJ policy decisions in March and April and limited worries about interim volatility or direction.

Traders bought good amounts USD/JPY options expiring after the March and April Bank of Japan meetings since being disappointed by the central bank's failure to tighten policy in January.
These options target increased USD/JPY volatility and potential losses.
Implied volatility is the option markets gauge of actual volatility expectations and its justifiably huge levels seen before January's BoJ meeting could easily be matched at the next.

Three-month expiry implied volatility captured the April 28 BoJ announcement from Tuesday with a big leap in implied volatility flagging the risk from this first meeting under a new governor.
Dealers say that many of those who bought options expiring after the March meeting are now rolling them past the April decision, suggesting a more likely timing for policy adjustment.

However, USD/JPY implied volatility is under broad-based pressure Wednesday as traders sell shorter-dated expiry options like the benchmark 1-month expiry to 12.65 from 13.15.
That price action is consistent with a lack of actual volatility or direction and can help to offset the cost of holding those post BoJ meeting premiums.
Even Wednesday's FOMC policy announcement demands less than half the USD/JPY volatility premium of January's BoJ.

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