U.S. Dollar ETF Put-Options Volume Surges to a Record Level
Put volume for an exchange-traded fund tracking the U.S. dollar against six other major currencies surged to a record after a single trade with a strike price 3.4 percent below today’s close.
An investor bought 94,039 June $21 puts to sell the PowerShares DB US Dollar Index Bullish Fund (UUP) for 16 cents each at 12:28 p.m. in New York, according to a report by Trade Alert LLC, a New York-based provider of options-market data and analytics, and data compiled by Bloomberg.
More than 102,700 puts traded today, a record. The June $21 puts were the most traded and accounted for almost all put trades. The ETF, which began trading in February 2007, declined 0.2 percent to $21.73. It has never closed below $21.65.
“The ETF is not far from record lows,” said Frederic Ruffy, a senior options strategist at WhatsTrading.com, a New York-based provider of options-market analytics. “Basically, what they’re saying is, ‘I’m going to buy these puts and look for it to continue falling.’” The puts “are not very expensive” because the fund “doesn’t make very big moves,” he said.
The fund replicates a long position in the U.S. dollar against the euro, yen, British pound, Canadian dollar, Swedish krona and Swiss franc.
Calls give the right to buy 100 shares of a security for a certain amount, the strike price, by a set date. Puts convey the right to sell. Investors use options to guard against fluctuations in the price of securities they own, speculate on share-price moves or bet that volatility, or stock swings, will rise or fall.
To contact the reporter on this story: Cecile Vannucci in New York at cvannucci1@bloomberg.net.
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.
Rate this Page