Hedge funds are betting that the USD/JPY exchange rate will fall below 150 by the end of the year, and some long-term options trades are even lower than 140. According to data from the Chicago Mercantile Exchange Group, the most actively traded USD/JPY options on Tuesday were put options due in November with an exercise price of 142.86; the total volume of put options due before the end of the year was more than three times that of call options. A USD/JPY put option will appreciate as the dollar weakens. USD/JPY is currently trading at 153.61. Jerry Minnier, head of global G10 spot foreign exchange trading at Citibank London, said, “Leveraged investors are active in trading and are responding to possible changes in the currency's pattern. Options combinations betting that the dollar falls below 150 against the yen by the end of the year are very popular.” Miner added that even with strong US non-farm payroll data last week, the yen's performance was strong, which boosted investors' confidence that the yen would continue to appreciate.

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