I got this off of Bloomberg's site needless to say pretty interesting.....
Speculators Buy Options Giving the Right to Sell Yen at 127
By Stanley White
June 14 (Bloomberg) -- Speculators bought at least $1 billion of options giving them the right to sell the yen at 127 to the dollar in six months, in a sign the world's worst- performing currency this quarter may extend losses.
The put options grant the right to sell the currency at a designated strike price. They traded with an implied volatility of 6.38 percent, said Takeharu Miki, a currency options trading manager at Bank of Tokyo-Mitsubishi UFJ Ltd. Implied volatility, a measure of expectations for future currency swings, is quoted as part of pricing options.
The yen has declined 4 percent this quarter as investors borrowed Japan's currency at the lowest rates in the industrialized world to fund purchases of higher-yielding assets, known as carry trades.
``Until now, people showed more interest in trading strike prices below the spot price because of worries about an unwinding in carry trades,'' according to Miki. ``Now that the spot market is at a four-year high, some people have changed their view.''
The dollar rose to 122.84 yen, the highest since 122.85 on Dec. 13, 2002, before trading at 122.75 at 1:38 p.m. in Tokyo. Implied volatility for six-month dollar-yen options near the current exchange rate last stood at 6.73 percent, up from 6.65 percent a week ago.
To contact the reporter on this story: Stanley White in Tokyo at
Speculators Buy Options Giving the Right to Sell Yen at 127
By Stanley White
June 14 (Bloomberg) -- Speculators bought at least $1 billion of options giving them the right to sell the yen at 127 to the dollar in six months, in a sign the world's worst- performing currency this quarter may extend losses.
The put options grant the right to sell the currency at a designated strike price. They traded with an implied volatility of 6.38 percent, said Takeharu Miki, a currency options trading manager at Bank of Tokyo-Mitsubishi UFJ Ltd. Implied volatility, a measure of expectations for future currency swings, is quoted as part of pricing options.
The yen has declined 4 percent this quarter as investors borrowed Japan's currency at the lowest rates in the industrialized world to fund purchases of higher-yielding assets, known as carry trades.
``Until now, people showed more interest in trading strike prices below the spot price because of worries about an unwinding in carry trades,'' according to Miki. ``Now that the spot market is at a four-year high, some people have changed their view.''
The dollar rose to 122.84 yen, the highest since 122.85 on Dec. 13, 2002, before trading at 122.75 at 1:38 p.m. in Tokyo. Implied volatility for six-month dollar-yen options near the current exchange rate last stood at 6.73 percent, up from 6.65 percent a week ago.
To contact the reporter on this story: Stanley White in Tokyo at