PowerShares US Dollar Bullish Index Fund (UUP) Nov 23 call is the most actively traded options contract for a second day. Volume surged to more than 330,000 contracts and the heavy trading left many of us wondering: why? Was it a play on the FOMC announcement? Were these call buyers also playing the actual currencies and looking for some type of arbitrage opportunity? Does somebody know something?! As it turns out, UUP shares were halted today and hit a high of $23.15 on news the fund is no longer issuing new shares. Now, with another 192,000 Nov 23 calls traded (35% bid / 33% mid / 32% ask-side), it appears that some “savvy” players might have anticipated today’s news and now appear to be exiting Nov 23 calls at prices ranging from 15 to 35 cents — after many positions opened yesterday morning at 15 cents.
The 5-minute chart below shows the action in UUP calls yesterday. Click to enlarge.
WhatsTrading.com
Objective Real Time Market Intelligence
PowerShares DB US Dollar Index Bullish Fund (UUP) $22.99 +2.1%
Posted on November 5th, 2009 3:45 pm
(1 votes, average: 5.00 out of 5)You need to be a registered member to rate this post.
Loading ...Welcome
Option 8-ball
In the News
| S | M | T | W | T | F | S |
|---|---|---|---|---|---|---|
| « Jun | ||||||
| Mouse over a bold date for a list of stories (premium stories are starred) | ||||||
| 1 | 2 | 3 | ||||
| 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| 11 | 12 | 13 | 14 | 15 | 16 | 17 |
| 18 | 19 | 20 | 21 | 22 | 23 | 24 |
| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
Sections
- **Flow Monitor**
- All Symbols
- AutoPost
- Buy-Write
- MarketUpdate
- NY Expo Case Study
- Options 101
- ToolBox
- Uncategorized
5 users commented on " PowerShares DB US Dollar Index Bullish Fund (UUP) $22.99 +2.1% "
Follow-up comment rss or Leave a TrackbackI guess the filing for the new shares came out Tuesday.
Weird, dollar nerds. Sounds like a one-off like what happened with UNG. I just trade off ISE myself (.XDA, .XDB, .XDC, etc.)
From what I understand:
The filing came out Tuesday saying, oh gee, we might be running out of shares. We need to plan for more shares.
Today, UUP was halted because, well, they ran out of shares.
The surge in call activity yesterday might have been in reaction to the filing Tuesday. Some smart people that understand how ETFs work (they sometimes trade at discount or premium due to supply and demand) might have figured, well, if they’re running out of shares, we might want to buy calls and hedge that bet by actually trading the currencies.
Less supply + higher demand for UUP will push the value of shares above the NAV and create an opportunity.
In addition, the heavy call buying and huge open interest probably added to demand for UUP shares. As Adam Warner notes on his Daily Options Blog, “Did the call buyer know the creation problem was about to happen or did he actually cause the problem via his purchases? Interesting question, because if you can cause this yourself, that’s kind of scary. I mean $4 million (of calls) seems like the rounding error of a rounding error for a currency desk.”
http://dailyoptionsreport.com/blog/post/uup-uup-and-away/
Link to SEC filings: http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001383151&owner=exclude&count=40
Looks like DBV is still open for business.