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Markets

Bear bets big against Australian dollar

The bears think Australia's currency is down under.

optionMONSTER's Depth Charge monitoring system detected the purchase of more than 4,000 January 104 puts on the CurrencyShares Australia Dollar trust for $3.50. It was the second straight session with heavy buying in the strike.

The FXA rose 0.6 percent to $102.27 on Friday but has been trending lower since early July. Based on the put buying, at least one big investor apparently believes that the currency will continue to fall in the next five weeks.

It's noteworthy that they chose expensive in-the-money contracts, which more closely track movements in the fund. Their selection of those puts indicates the trader is speculating on a drop rather than trying to protect a long position . (See our Education section)

The bearishness came shortly after Australia's central bank cut interest rates for the second straight meeting on worries its economy may slow. Given that investors usually buy the Aussie dollar for its higher yield, some investors may expect lower rates to be a drag on the currency.

Overall option volume in FXA was 4 times greater than average in Friday's session, with puts outnumbering calls by 22 to 1, according to the Depth Charge.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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