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Options Traders Start to Sweat Over Potentially Wild Yen Rally

  • Out-of-the-money dollar-yen puts still higher than calls
  • Dollar-yen could collapse in hard landing: Societe Generale

The fundamentals may be stacked against the under-pressure yen but traders are still willing to bet on a sharp move higher amid the risk of a global recession or an unlikely Bank of Japan policy change.

Highly speculative one-month dollar-yen put options cost over two percentage points more than equivalent calls -- a sign of increased demand for bullish yen bets, according to data compiled by Bloomberg. The so-called delta 5 out-of-the-money options are seen by traders as having only about a 5% chance of being exercised before expiring.