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How trader is using puts to play yen

Chris McKhann (chris.mckhann@optionmonster.com)

A large put spread topped yesterday's option activity in the Currency Shares Japanese Yen Trust.

optionMONSTER systems show a trader sold 4,000 December 84 puts for the bid price of $0.35, then bought two blocks of 1,000 December 89 puts for $0.95 than $0.90. The volume was above the previous open interest in each strike, indicating that these are new positions.

This ratio spread uses the sale of more lower-strike puts to offset the cost of the highest-strike contracts. The maximum profit for the spread comes if the FXY is down around $84 at expiration, but the trader is effectively long shares below that level. (See our Education section)

The FXY fell another 1.34 percent to close at $99.15 yesterday. The exchange-traded fund, which tracks the movement of the Japanese currency, hit a low of $94.38 on May 22 but was climbing into the end of last week. It was above $127 in September.

More than 19,000 FXY options traded in total yesterday, about 30 percent more than the daily average in the last month.

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