Japan’s Prime Minister Ishiba has firmly stated that Japan will not back down on US tariffs. This declaration comes after Akazawa’s recent trip to Washington, which resulted in little progress. No agreements have been made regarding tariff cuts, and Akazawa plans to return to the US later this week for more talks. There are only 37 days left to find a solution. Both sides feel the pressure to reach a deal within this time frame. With just 37 days remaining, Tokyo’s stance remains strong. Ishiba’s commitment not to yield on US tariffs highlights Japan’s aim to resist outside pressure while bolstering local support. His comments come right after Akazawa’s meetings in Washington, which ended without any advancements, showing a clear stalemate. This situation is already affecting derivative markets. Currently, we see early signs of volatility, especially in options related to Japanese export-focused indices. The absence of an agreement suggests uncertainty will persist, leading to fluctuations in short-term expected volatility. Traders watching price movements through gamma and vega lenses may need to adjust strategies. The spread between implied and real prices has widened, likely in anticipation of news-driven changes. Akazawa is getting ready to head back to Washington. Meanwhile, attention shifts to USD/JPY pairs and equity options sensitive to exports. Open interest in downside puts has quietly increased over the past day, likely from traders looking to hedge more tactically. As real-time news will significantly influence prices, a strategy that balances directional views with defined risks may help manage near-term exposure. Traders should stay alert for the next ten trading sessions since negotiations could take longer than expected. The gap between what politicians say and what is economically necessary always creates uncertainty—something algorithms haven’t fully accounted for in trading volumes. We should also watch for secondary effects. Currently, sector skews are expanding in the auto and tech-related options, hinting at a potential adjustment of earnings forecasts, even if tariffs stay the same. Markets often react before policy changes are confirmed, especially when negotiations stretch out without new developments. Timing is crucial. As we approach the end of this 37-day deadline, the derivatives market will likely react strongly to even minor changes in statements from negotiators. Rising vega values may occur as traders prepare for sudden breakthroughs or setbacks in discussions. Skew patterns might shift if hedgers grow more concerned about downside risks. We are monitoring positioning, both speculative and protective, and expect changes in futures basis and daily trading volume to provide early indicators. Remember, being patient does not mean being passive. In the coming weeks, a careful yet flexible strategy may yield better results as clarity remains elusive and risks grow.

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