The UUP dollar exchange-traded fund is not far off the 52-week high, but a huge trade is looking for it to drop.
The PowerShares U.S. Dollar Index Bullish Fund is down fractionally at $22.52 in midday trading. The fund has run up from the 2012 support of $21.75 and is not far off its January highs, which saw it close as high as $22.75. The UUP and the S&P 500 have had high negative correlation of late, now at -0.94.
More than 21,000 UUP options have changed hands today, almost all of that in one print in the December 19 puts. A trader bought 20,000 of those contracts for $0.03 with no open interest at that strike, so this is a new position.
The put buying isn't tied to any trading in the underlying stock that we can see today. It could be hedging against long shares bought previously, but the UUP's all-time low is $20.84, reached back in May 2011.
So this appears to be an outright bearish bet, though the delta of the position is just 0.01, which suggests only a 1 percent probability that those puts are in the money at expiration. (See our Education section)
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