The euro is heading lower, and some traders are playing the move
by combining the power of options with a leveraged ETF.
optionMONSTER's Heat Seeker tracking system detected heavy call
buying in the ProShares UltraShort Euro (
) exchange-traded fund, which moves twice as much as the common
currency, but in the opposite direction.
Money flowed into the September 21 calls, which mostly traded for
$1.10 to $1.20, and the August 21 calls for $0.77 to $0.85. The
September contracts changed hands 4,299 times while the August
calls saw volume of 2,182. Activity was more than twice open
interest in both strikes.
EUO rose 2.12 percent to $21.68 in early afternoon trading and is
up about 3 percent in the last three sessions amid weakness in the
The common currency is now heading lower after a blistering
two-month rally from $1.19 to $1.33. The move, which followed the
panic about fiscal difficulties in Greece and Portugal, brought the
euro to a key chart level from March and April where some traders
might expect resistance.
Today's option transactions are noteworthy because the investor is
using the power of options to amplify a move in EUO, which itself
is designed to leverage a drop in the euro.
The activity pushed total options volume in the fund to 7 times
greater than average. Calls outnumbered puts by 118 to 1.
(Chart courtesy of tradeMONSTER)