Markets

Strategy manages timing in dollar fund

One investor is using options to exit a bullish trade in the dollar.

optionMONSTER's monitoring programs detected the sale of about 8,600 January 15 calls on the PowerShares DB U.S. Dollar Index Bullish exchange-traded fund. The contracts priced for $7.45 and obligate the investor to sell the fund for $15.

Including the credit received, that translates to an exit price of $22.45, which was just $0.01 below the UUP's price at the time the trade crossed. It's edged up since then and is now trading at $22.57, up 1.03 percent on the day.

The interesting thing about the trade is that it establishes an exit price and sets the sale date for next month. Given that the UUP has been rallying since the summer, it appears that the investor wants to lock in the gains now but push the timing into the next tax year. (See our Education section for more information on how investors can use options to manage positions.)

There was also heavy call selling in the fund yesterday, which suggests that the investors think the greenback's recent strength has run its course and the currency will now pause or decline.

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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


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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