CurrencyShares Japanese Yen Trust (FXY) closed up 1.2% in pre-open trading. Overall option implied volatility of 15 is above its 26-week average of 11, according to Track Data, suggesting larger price movement.

Red Hat Inc. (RHT) April 44 calls were active on 26K contracts. April and June call 40 call option implied volatility is at 43. This is compared to its 26-week average of 39 according to Track Data, suggesting traders taking positions for larger movement into Q4 results expected to be released on March 23.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

This post is one in a series in which more than 60 newsletter advisors share their Top Stock Picks for 2011. This special report is courtesy of TheStockAdvisors.com.

"Bloomberg recently reported that China has recorded two straight months of reducing its holdings of Japanese debt; t.his suggests that the Japanese yen has reached the point where it's become too 'strong' for its own good -- or at least for China's taste," says global stock specialist Keith Fitz-Gerald.

The editor of The New China Trader explains, "Considering China has become the world's de facto financier, we'd be wise to pay attention.

Euro Currency Trust (FXE) closed down 0.6% to 131.93 , near its 100-day moving average of 132.47. Overall option implied volatility of 13 is near its 26-week month average according to Track Data, suggesting non-directional price movement.

CurrencyShares Japanese Yen Trust (FXY) closed down 0.62% to $117.68. The FXY reflects the price of Japanese Yen plus accrued interest. FXY over all option implied volatility of 11 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

One disastrous international trade policy of the 1930s concerned tariffs: nations increased tariffs on imports to protect domestic industries; when applied universally, it resulted in declining export sales and trade volumes. Tariffs made the Great Depression worse.

Now, it appears, nations are on the verge of implementing another counter-productive policy -- manipulating currencies -- and if public officials are not careful, a similar downward spiral in international trade could occur.

The yen weakened early Friday on speculation that the Bank of Japan will re-enter the currency market to further sell the yen to protect exports, Bloomberg News reported.

That sets up a classic struggle between the Bank of Japan, which has already intervened this month --- selling the yen to weaken the currency versus the dollar -- and yen-bullish institutional investors, who believe market forces will be stronger, and ultimately lead to a stronger yen versus the buck.

The yen weakened early Friday, rising as much as 1 yen to 85.38 yen to the dollar, before strengthening late Friday afternoon, to 84.29.

China's currency reserves are estimated at $2.45 trillion dollars. While hard data is a state secret, some information was obtained from the China Security Journal and reported by Reuters.

Roughly 65% of China's currency reserves are in U.S. dollars, 26% in euros, 5% in pounds and 3% in yen. With such a huge sum outstanding, Chinese officials are afraid of depreciation. Hu Xiaolian, vice governor of the Peoples Bank of China, writing in China Finance said: "Once a currency's value becomes unstable, there will be quite large depreciation risks for assets."

Just last week, the demand for U.S. dollars was strong. We had the Greek crisis fueling the dollar's rise to new recovery highs.

But that was last week. The EU came up with a watered-down bailout plan for Greece and other EU members with debt problems. With that announcement, the dollar started to fall back from its highs.