Bulls look for dollar to resume run
Traders are betting that PowerShares DB U.S. Dollar Bullish Fund will resume its march higher.
More than 8,000 Weekly 25 calls expiring on July 2 were purchased for the ask price of $0.23 yesterday, according to optionMONSTER's Heat Seeker tracking program. This is fresh buying, as open interest in the strike was a mere 48 contracts before the session began.
Long calls lock in the price where investors can buy a stock, which lets them position for a rally with limited capital. That can be safer than purchasing shares directly because only the cost of the options can be lost on a pullback. The calls can be sold anytime before they expire but will lose value if the stock falls. (See our Education section)
UUP was off 0.08 percent to $24.87 yesterday. The exchange-traded fund, which tracks the value of the U.S. dollar against other currencies, hit a six-year high of $26.50 on May 13 but has since pulled back into an increasingly narrow range.
Total option volume in the name topped 19,900 yesterday, more than 25 percent higher than its daily average for the last month. Overall calls outnumbered puts by a bullish 5-to-1 ratio.
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