Please observe the IV factor for ATM contracts with 1w expiries. It is smoothening from last week's 12.75% to 9.6% but we still think this as higher side without any significant market dragger news except German ZEW economic sentiment and German and French PMIs.

On the flip side, as shown in the diagrammatic representation EURJPY ATM puts are priced 14% more than NPV which would mean that, synchronizing IV factors with these options pricing in order to generate the positive cash flows on downside, OTC markets are moving in tandem with market sentiments.

There exist the 9.6% probabilities of ATM put instruments to expire in the money.

Hence, we believe there exists no disparity between vols and premiums and accordingly Put Ratio back Spread strategy is on competitive advantage than naked contracts through option writings.

Alternatively, risk averse can even deploy option strips as well.

The delta risk reversal numbers are also getting higher negative values gradually in a long run.

Hedging activities of downside risks are mounting up, as a result Put options seem costlier.

Volatility smiles most frequently tells that traders are willing to pay higher implied volatility prices as the strike price grows aggressively out of the money.

The current spot FX is trading at 132.982 and we will continue to remain bearish with near targets extending dips up to 131.035 and then 129.50 levels.

So, the recommendation for now is to add an extra-long on put with 1M expiry to any debit put spreads.

So, the strategy goes this way, long 2 lots of 1M ATM -0.49 delta put and simultaneously short 1 lot of 2D (0.5%) ITM puts with positive theta values (for demonstrated purpose only we've used identical expiries, use shorter expiries as stated in the strategy).

With these narrow strike differences, the profit potential is greater, so that the ratio needed is also lower to profit on underlying movement.

Caution: If you think the pair is going to crash, you should be loading up on put buys in existing strategy. The total cost of the trade is going to be the difference between the prices of the two options.