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

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Unusual Options Activity In PowerShares DB US
Dollar Bullish ETF UUP
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• Hi, My name is Steve and Im with Options Trading
  Research, today were reviewing our recently
  published article

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• Unusual Options Activity In PowerShares DB US
  Dollar Bullish ETF UUP

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• 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.

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• 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.

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• So lets 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.

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• 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.
  Thats 7 below the 52-week high, and 12 from
  the 52-week low.

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• So what does unusual options activity in UUP tell
  us?

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• 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.

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

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• Relative to just about everywhere else, the
  dollar is still the safest currency out there.
  Heres the dealThis week, a trader bought a huge
  block of calls on UUP.

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• 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.

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• 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.
• Heres the chart of UUP

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• 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.

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

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• The trader was able to buy the calls for just 10
  cents because UUP doesnt move all that much
  (like most currency ETFs). However, the ETF
  price could very easily climb above 25 by
  September expiration

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• . In addition, the call price doesnt have to
  appreciate that much in order for the trade to be
  a big winner. Thats the benefit of buying
  50,000 calls!

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• More Options Trading Ideas

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• Keep in mind, theres 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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