Options Trading News

November 30, 2012  Fri 2:14 AM CT

Bears are circling the Japanese yen, which has been teetering for the last two months.

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.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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