Since the Bank of Japan remains concerned by yen strength and could prevent a move below 100.

Leveraged call spread is welcome as the dollar buoyed at 100 while thanking to high 2m volatility.

Brexit uncertainty is preventing volatility to collapse. USDJPY 2m vol is, however, cheap, as it trades below the realized vol. The market should, therefore, experience larger spot deviations than what is discounted; making a tight call spread strikes 102/105 naturally highly leveraged.

At spot ref: 101.06, initiate longs in USDJPY 2m call strike 102.50 knock-out 99, short 2m call strike 105.

Risks: USDJPY hitting 99 and bouncing above 105.

If USDJPY hits 99 at any time, investors are left short a naked call strike 105 and are exposed to unlimited topside risks in the event of a sharp bounce from 99.

But the option would be 6 figures OTM, leaving time to either unwind the trade or implement a delta hedge.

USDJPY likely to bounce when risk aversion subsides:

Risk aversion is pressuring the USDJPY to fresh lows. Prices are gradually discounting the possibility of the activation of Article 50 by the UK (The Treaty of Lisbon) and there should be no rush to trigger it. The market is likely to take profit on risk-off positions, providing near-term relief to USDJPY.