With the sharp downtick in equities and.....>

OPTIONS: With the sharp downtick in equities and the crush in the Treasury yield

curve Friday, FX hedging activity is well above average, with yesterday's (the

week's highest) volumes likely to be topped Friday. FX implied vols are also

suitably higher across the board, with the sharpest gains seen in front-end

contracts across JPY, CHF, MXN and RUB pairs.

- A number of DMFX risk reversals contracts have broken out of their recent

range, with USD/JPY 1m contract hitting the lowest levels since the Global

Financial Crisis in late 2008. Similarly, options markets are now the most

bullish toward EUR/USD in the front-end of the vol curve since Bloomberg records

began.

- JPY, CHF and EUR hedging has been particularly active Friday, while AUD, CNY

and CAD markets have been quieter than recent days.

- Unsurprisingly, USD/JPY puts have been in demand from the off, with Y105, Y104

and Y100 strikes garnering the most attention. One of the larger trades crossing

in early NY hours was a $250mln Y105/106.50 put spread, generating premiums of

over $4mln.