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Bulls put their money in dollar fund

Mike Yamamoto (mike.yamamoto@optionmonster.com)

The dollar fell sharply last week, but traders apparently believe that it will bounce back in coming weeks.

optionMONSTER's Heat Seeker system detected heavy buying as more than 21,000 August 23 calls traded in the the PowerShares DB USD Index Bullish Fund on Friday, including a single print of 10,000 purchased for $0.10. The volume was far above the strike's previous open interest of 2,337 contracts, showing that these are new positions.

The UUP, which tracks the dollar's performance against six other major currencies, rose 0.25 percent to $22.47 on Friday and is now right at its 50-day moving average. The exchange-traded fund hit $22.98 last Tuesday, just off its 52-week high of $23.14 reached almost a year ago, but gapped down two days later as bond yields fell.

Friday's long calls lock in a $23 purchase price for the UUP through mid-August no matter how far it might climb. But these contracts could expire worthless if the fund remains below that level. (See our Education section)

Total volume in the UUP finished Friday near 37,000 contracts, more than 5 times its daily average for the last month. Calls outnumbered puts by a bullish 15-to-1 ratio.

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