Analyst Paul Weisbruch brings investors his daily ETF options update, which includes a very bearish bet on the oil and gas sector, along with some unusually bearish activity in options tied to the U.S. dollar.
We mentioned an increase in XOP (SPDR Oil & Gas Exploration & Production) options trading earlier this week, which consisted of upside March call buyers. We also have seen December 33 strike put buyers this week, and with the ETF trading above $38, this would require a significant pullback in the short term in the sector to occur before these options were in-the-money. XOP last traded near the $33 range in early August of this year, so there’s quite a bit of downside needed if those bearish bets are going to pay off.
In other action, UUP (PowerShares U.S. Dollar Bullish) March 25 puts have been active in recent sessions on another leg up in the USD both yesterday and today on heavy volume in the underlying ETF. The Dollar has been on an absolute tear since early November and seems to be accelerating momentum to the upside but UUP itself has seen very slow net creation activity ($5 million in) in the trailing one month period.
UUP shares rose $0.08 (+0.33%) to $26.18 per share in Friday afternoon trading, briefly touching new 52-week highs of $26.24. Year-to-date, the largest fund to the U.S. Dollar, with over $800 million in AUM, has gained 4.59%.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.