Checkout Options Trading Research for free Articles! http://www.optionstradingresearch.com Recently, there has been some unusual options activity in PowerShares DB US Dollar Bullish ETF $UUP.

1. OPTIONS TRADING
Unusual Options Activity In
PowerShares DB US Dollar
Bullish ETF $UUP

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4. Hi, My name is Steve and I‘m with Options
Trading Research, today were reviewing
our recently published article…

5. Unusual Options Activity In PowerShares
DB US Dollar Bullish ETF $UUP

6. As many of you know, unusual options
activity can be a valuable indicator as to
what traders are thinking, and more
importantly, where these stocks are
heading in the short-term.

7. This is something professional options
traders pay a lot of attention to, and for
good reason… Unusual options activity
can “tip off” big moves in a stock, either
up or down.

8. So let’s take a look at some ‘interesting’
activity that caught our eye this week:
PowerShares DB US Dollar Bullish ETF
$UUP is a popular method for investing
in the US dollar.

9. The ETF compares the dollar against a
basket of six major world currencies. For
a good description of the fund, follow the
link.
$UUP is trading at $24.68, up 2% for the
year. That’s 7% below the 52-week high,
and 12% from the 52-week low.

10. So what does unusual options activity in
UUP tell us?

11. Buying UUP is the equivalent of investing
in the US dollar (such as buying treasury
bonds). The difference is the ETF is
being tracked against a basket of six
world currencies rather than being a
standalone fixed income product.

12. Regardless, the stronger the dollar, the
better UUP does. The dollar has been
particularly strong lately despite ultra low
rates. That’s essentially because the US
economy has been the strongest in the
world.

13. Relative to just about everywhere else,
the dollar is still the safest currency out
there. Here’s the deal…This week, a
trader bought a huge block of calls on
UUP.

14. Keep in mind, a call option makes money
when the underlying stock or ETF goes
higher. Specifically, a trader purchased
50,000 September 25 calls for $0.10.

15. The total cash collected for this trade is
roughly $500,000. Breakeven point for
the trade is $25.10. Given the open
interest, this trade is clearly an opening
position.
Here’s the chart of $UUP:

17. UUP has dropped below the 50-day
average the past few days due to the
correction in equity markets. However,
the steep losses look they hit a bottom
and may be in the process of reversing.

18. This trade suggests the dollar’s retreat is
at an end. What’s more, with emerging
market economies looking fragile, the
dollar is once again being recognized as
the safest play to be.

19. The trader was able to buy the calls for
just 10 cents because UUP doesn’t move
all that much (like most currency ETFs).
However, the ETF price could very easily
climb above $25 by September expiration

20. . In addition, the call price doesn’t have
to appreciate that much in order for the
trade to be a big winner. That’s the
benefit of buying 50,000 calls!

21. More Options Trading Ideas…

22. Keep in mind, there’s a lot more unusual
options activity going on than what we
discuss here. We just try to bring you
what we feel are the most significant
ones– and the ones you might actually be
able to make some money on!

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