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Traders Are Hedging Against A Weaker Dollar And Financials

Tuesday, November 8, 2016 10:01
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Analyst Paul Weisbruch calls attention to some unusual options activity in a popular U.S. Dollar fund, and how the bearish bets are carrying over to the largest financial ETF as well.

The U.S. Dollar spiked off of its recent lows yesterday and above average volume traded in UUP (PowerShares U.S. Dollar Bullish), and the options have been somewhat active lately as well.

Trading at approximately $25.27 this morning, we have seen some action in the December 25 puts lately, and we note that UUP traded as low as $25.06 just three trading sessions ago (50 day MA $24.99, 200 day MA $24.82). Year-to-date UUP has seen more than $267 million vacate the fund via redemption pressure.

Elsewhere, as we had mentioned previously in a recap here, XLF (SPDR Financial) put buyers continue to surface as well, seemingly hedging against downside over the next several months. We have seen December and now January 19 strike puts trade there lately.

A whopping $3.8 billion has left XLF year-to-date, which is a significant amount of outflow for this ETF. It’ll be interesting to monitor these flows as we head through the election and into the end of 2016.

The PowerShares DB US Dollar Index rose to $25.28 per share in Tuesday morning trading, up $0.01 (+0.06%). Year-to-date, the largest fund tied to the U.S Dollar has fallen 1.42%.

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.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.

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 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.

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