Big trade looks for yen fund to implode
David Russell | [email protected]
optionMONSTER's Depth Charge tracking program detected the purchase of 5,000 June 115 puts on the CurrencyShares Japanese Yen Trust for $1.725. An equal number of June 110 puts were sold at the same time for $0.70. Volume was more than quadruple the open interest in each strike, indicating new activity.
This position cost $1.025 and will earn a maximum profit of 388 percent if the exchange-traded fund closes at or below $110 on expiration. for more on the strategy, known as a bearish put spread because it leverages a move between two prices.)
The FXY fell 0.17 percent to $119.48 yesterday and has lost about 5 percent of its value since the beginning of October. It has been falling as traders speculate that Japanese policymakers will take further steps to weaken the currency in a bid to spur exports. The fund hit a long-term high around $130 last year and has been holding near those levels as investors flock to the yen as a safe-haven asset.
Total option volume in the FXY was more than quadruple the daily average in the session, according to the Depth Charge. Puts outnumbered calls by 27 to 1.